Jan 13, 2022

The Launch of Arc: The Founder-Friendly Fintech Platform That’s Helping Startups Grow

Don Muir portrait
Don MuirCo-Founder & CEO

Today, we announced Arc’s $161 million in total equity and debt funding, led by world-class investors including NFX, Bain Capital Ventures, Clocktower Technology Ventures, Torch Capital, Soma, Dreamers, Alumni Ventures, Atalaya, Stanford, and Y Combinator. 

Today is Day 1 of Arc’s journey to help startups grow and I’m excited to share
our founding story with you.  

Last year, Nick, Raven, and I founded Arc out of my living room in Menlo Park. It was the peak of the global health pandemic when Stanford University went into lockdown. Campus was boarded up. Classes were fully virtual. The MBA experience was turned upside down. The silver lining? The lockdown gave us the opportunity to focus 100% of our time and attention on building Arc. 

Prior to business school, Nick and I worked in private equity & investment banking in New York, collectively raising tens of billions of dollars of capital to finance mature, late-stage companies. We experienced firsthand the shortcomings of traditional capital raising – namely, the slow, offline, and transactional nature of the deal process. An army of investment bankers, credit analysts, and lawyers will spend months toiling in data rooms and building static models in Excel to close a financing transaction that ultimately costs a company millions of dollars (before taking into account the opportunity cost of management’s time). Meanwhile, Raven spent the past decade in Silicon Valley where he worked as a software engineer at both big tech and VC-backed startups and witnessed the emerging trend towards consumerized enterprise software. 

United by a shared passion for finance and entrepreneurship, the three of us joined forces at the Stanford GSB. We teamed up with Y Combinator and met hundreds of software founders in the San Francisco Bay Area. We quickly realized that they shared a common pain point – startup funding is costly and distracting. Even in a zero interest rate environment, dilution is extraordinarily expensive for startup founders. At the same time, offline and bureaucratic banks with outdated underwriting policies and limited bandwidth are structurally unable to serve earlier stage opportunities. Even premium recurring revenue software startups are oftentimes neglected by traditional lenders. 

We created Arc to give founders an alternative to the status quo. Now we’re on a mission to help startups grow – with technology and without dilution.

Historically, startups have been forced to choose between two imperfect capital raising options to fund their growth: equity and debt. This presents a difficult tradeoff for startup founders who must optimize for retaining ownership or operating flexibility. In both scenarios, founders have become accustomed to slow, offline, and distracting capital-raising processes.

Arc eliminates the dilution from selling equity and avoids the restrictive covenants, guarantees, and insolvency risk associated with raising debt. Arc offers a modern financing solution that improves data access and underwriting efficiency and provides the seamless user experience that software founders have come to expect everywhere outside of capital raising.

Where traditional financial institutions deploy hundreds of analysts to manually underwrite transactions, Arc uses technology to algorithmically price the risk inherent in startup financing. APIs offer real-time access to financials, machine learning enhances data value, and cloud analytics unlock scalable, automated processes. The result is more flexible, efficient, and affordable capital that is offered programmatically to our customers. 

Non-dilutive capital is just the tip of the iceberg. Today, Arc provides a better way for SaaS founders to raise capital by avoiding costly dilution and risky debt. Tomorrow, Arc will become the finance backbone of the SaaS startup. Arc will not only help software founders access capital at a lower cost on demand but it will also help founders save, spend and manage cash, while leveraging proprietary insights benchmarked against peers to optimize cash flow and grow efficiently. This entire financial ecosystem is being purpose-built for the SaaS founder, who faces unique cash flow needs and therefore deserves customized finance solutions. We want founders to know that when it comes to accessing and managing capital, Arc has your back.

Seven months ago, we were three Stanford students tinkering on a fintech idea during a global health pandemic. Today, we're 15 FTEs with a live product, paying customers, and $160M+ of fresh equity & debt capital. And this is only the beginning. 

To join the 100+ startups already on the Arc platform and to see if you qualify for financing, please visit www.arc.tech, onboard in under five minutes, and get approved for funding within 48 hours.