R3, a New York-based startup, which aims at building a blockchain-like technology for financial institutions, has raised $107 million in funds from over a dozen financial and technology companies. The contributors worth mentioning are Intel Corporation (INTC - Free Report) , Bank of America Corporation (BAC - Free Report) and Wells Fargo & Company (WFC - Free Report) .
R3, started in 2015, leads a consortium of more than 70 banking and financial companies. The primary objective of these institutions is to incorporate the distributed ledger technology i.e the blockchain technology into their systems. The blockchain technology is expected to lower cost of transaction, as well as increase the speed of operation. It allows transactions on the bitcoin network to be recorded and not tampered with.
Hence the R3 members want to use this new technology for various tasks ranging from asset trading to money transfers.
R3 wants to raise $150 million from its members and the investors will be given a 60% stake in the company.
Foreign investors participating in this deal include HSBC Holdings plc (HSBC - Free Report) , Itaú Unibanco Holding S.A. (ITUB - Free Report) , Barclays PLC (BCS - Free Report) and UBS Group AG (UBS - Free Report) .
R3 called for investments in three different tranches. The first tranche was open to all investors. Those who invested in the second round had to put in more money and were given governance responsibilities. The third and final tranche requires investors to put in a large sum of money and offers a position in the Board.
The funding process began last year and the $107 million of investment completes the first two rounds of financing. The third round is expected to be carried out later in 2017.
Notably, in the last few months, various banks like JPMorgan Chase & Co (JPM - Free Report) , The Goldman Sachs Group, Inc. (GS - Free Report) , Morgan Stanley (MS - Free Report) and Banco Santander, S.A. (SAN - Free Report) quit the R3 consortium following the completion of the first two rounds of financing.
A spokesman for R3 said that even State Street Corporation (STT - Free Report) has left the group.
R3’s Chief Executive Officer, David Rutter, in an interview, said, "This year we will have pilot projects and early production phase products in the market."
However, he added, "We are a couple of years away until we see massively impactful products."
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