Blockchain company R3 CEV has decreased the target amount to strengthen from bank members in its first huge round of equity funding to $150 million from $200 million. New York-based startup, R3 that runs a consortium of more than 70 financial institutions, now intend to give bank members a 60 percent equity stake in its blockchain business in exchange for the capital. One of the earliest members Goldman Sach Inc, is not extending its membership and is not spending. Other majority banks have settled to the new conditions of the deal, but R3 does not expect all existing members to join the round, said the source, who wants anonymity to discuss plans that were not public.
New firms are also looking to sell blockchain-based technology to banks. Rivalry among these startups has aggravated over the past few months as they try to secure investments and deals with large institutions to provide the technology. R3 comes up with techniques for the financial industry to use blockchain software through its consortium and technology development lab. According to the new conditions of the deal, the banks will also gain a stake in the development lab, which tests new blockchain-based uses. R3 had initially planned to give shareholders equity stakes in a new company providing shared services for the holders. R3 would have run this service for 10 years and kept a stake in it. The lab would not have been included in the agreement.
The organization’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 source said. R3 has quickly achieved the help 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 corporation’s exercises.