| NEW YORK
NEW YORK Nov 21 Blockchain company R3 CEV has
reduced the amount it aims to raise from bank members in its
first large round of equity funding to $150 million from $200
million, according to a person familiar with the plans.
R3, a New York-based startup that runs a consortium of more
than 70 financial institutions, now plans to give bank members a
60 percent equity stake in its blockchain business in exchange
for the funding, the source said.
Goldman Sachs Group Inc, one of the original
participants, is not renewing its membership and is not
investing, a spokeswoman said.
Most other banks have agreed to the new terms of the deal,
but R3 does not expect all existing members to join the round,
said the source, who requested anonymity to discuss plans that
were not public.
R3's fundraising comes as banks and other large institutions
ramp up their investments in blockchain, which is also known as
distributed ledger technology. It first emerged as the
technology underpinning digital currencies like bitcoin but is
now being adapted for use in more traditional financial tasks,
such as transaction processing.
Other new companies are also looking to sell
blockchain-based technology to banks. Competition among these
startups has intensified over the past few months as they try to
secure investments and deals with large institutions to provide
R3's funding will be raised in phases over the next nine to
12 months, the source said.
Through its consortium and technology development lab, R3
comes up with ways for the financial industry to use blockchain
According to the new terms of the deal, the banks will also
acquire a stake in the development lab, which tests new
R3 had originally planned to give investors equity stakes in
a new company providing shared services for the owners. R3 would
have run this utility for 10 years and retained a stake in it.
The lab would not have been included in the deal.
The group's original 42 members will be able to invest
first, followed by members of the company's development lab. If
the $150 million target is not reached, the round will be opened
to other strategic investors, such as a technology company, the
Since it began operating in September 2015, R3 has rapidly
gained the support from the world's largest banks, with members
including UBS Group AG, JPMorgan Chase & Co and
Deutsche Bank AG. So far they have paid membership
fees to participate in the company's activities.
Thomson Reuters Corp is also a member of R3.
The Wall Street Journal earlier reported Goldman dropped out
of the consortium.
(Reporting by Anna Irrera in New York; Editing by Lauren Tara
LaCapra and Lisa Von Ahn)