Arc, the full-service finance platform for software startups, launches Runway by Arc to help founders weather a volatile macro environment. As VCs and boards are encouraging already funded startups to shore up additional capital and rein in burn to extend runway until deal flow returns, Runway utilizes Arc’s proprietary ML-enriched underwriting algorithm to analyze net cash burn and cash on hand. Within 24 hours, founders are provided flexible, low-cost capital with zero dilution or debt, enabling continued operations and financial stability during volatility.
According to Pitchbook, despite the breakneck momentum of the past two years, 2022 has already experienced depressed equity markets and a prominent theme of inflation, contributing to investors’ uncertainty and an overall decrease in VC investments.
Arc supports founders in ways traditional VCs can’t — with speed, a higher volume of capital, and retained ownership.
“Software founders are experiencing the perfect storm of rising interest rates, turbulent public markets, and geopolitical disruption — catalyzing a tightening across the capital markets, both equity and debt”, said Don Muir, Co-Founder and CEO of Arc. “This has disproportionately impacted software startups; in just a few months, revenue multiples across the BVP Cloud Index have been cut in half from their highs in Q4 2021. Multiple contraction is now bleeding into the private markets, making equity relatively more expensive for even early-stage software founders. Runway meets software companies where they’re at and injects dilution-free liquidity into the business when they need it the most. We want founders to know that when it comes to accessing and managing capital, Arc has your back.”
Arc built a first-of-its-kind fintech solution, in partnership with Stripe, where software founders can borrow, save, and spend on one comprehensive digital platform. Its introductory product, Arc Advance, allows software founders to seamlessly convert future revenue into upfront capital without dilution at the click of a button. With Runway, founders now have access to faster approval and more predictable rates.
Since its launch, Arc is working with hundreds of customers and has deployed tens of millions of dollars in non-dilutive funding to high-growth software startups. Arc has experienced 100% month-over-month volume growth every month since launch last year.
James Slezak, Founder and CEO of Swayable, a Series A YC-backed B2B software business commented: “Arc fills a massive gap for successful startups, who end up transferring unnecessary amounts of value to traditional equity financiers. If you’re tripling the value of your company in a year, equity financing comes at a 200% cost of capital. Why would anyone choose not to build a capital stack that starts with far more easily accessible financing at 1/10th the cost?”
Historically, high-growth software companies in their earliest stages turned to venture capital and occasionally venture debt to fund their growth. These traditional sources of capital leave startups with expensive and offline solutions that limit their ownership, control, operating flexibility, and ultimately growth. Arc provides software founders with a digitally-native tool to fund growth without dilution, tapping into future recurring revenue to pay for operating expenses today.
Arc’s underwriting and machine learning technologies offer its users a solution in minutes, while traditional banks can take months. Through its partnership with Stripe, Arc now offers customers the ability to store and spend their funding from Arc on a single platform. By building on top of these technology solutions, Arc has turned financing on its head, allowing founders to borrow against the future revenue of their company and grow efficiently. Additionally, technology-driven financing removes the biases inherent in conservative financial services — leveling the playing field for founders, especially those outside of Silicon Valley. With Arc, startups can access the capital they need when they need it — without debt or dilution.
To join the 500+ startups already on the Arc platform and to see if you qualify for financing, please visit https://app.arc.tech/, onboard in under five minutes, and get approved for funding within 24 hours.