Arc raises $161m to build financing platform for software startups

The fintech’s platform is designed to provide an alternative to venture capital

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Arc raises $161m to build financing platform for software startups

Arc, the provider of a new financing platform for software-as-a-service (SaaS) startups, has launched with $161 million in total equity and debt funding.

NFX, Bain Capital Ventures, Clocktower Technology Ventures, Torch Capital, Soma, Dreamers, Alumni Ventures, Atalaya, Stanford, and Y Combinator are among the investors to support the launch of Arc, based in San Francisco, California.

The fintech’s platform is designed to provide an alternative to venture capital and give SaaS startups a way to borrow, save and spend. It was built in partnership with Stripe and already has more than 100 customers signed up.

Don Muir, co-founder and chief executive officer of Arc, says the platform aims to solve the “difficult tradeoff for startup founders who must optimise for retaining ownership or operating flexibility” when raising capital.

He explains: “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.”

Arc plans to double the size of its team in Q1 2022 from the current 15 employees, with a focus on engineering, data science, underwriting and sales.