Arival, a digital bank that seeks to be crypto-friendly, has apparently only raised $210,000 of a funding round of $3 million on SeedInvest. The securities offering is being cross-listed on Crowdcube which indicates a larger amount of £348,912 being raised on a hurdle of £700,000. The Crowdcube offering page includes “£264,336 raised via a co-offering being conducted abroad” which may not have been recently updated as the SeedInvest recently declined from over $300,000 to just over $210,000 displayed today.
Digital banking is a hot sector of Fintech with challenger banks being valued in the billions of dollars. Currently, there are a good number of both UK and US digital banks that have captured solid momentum as they seek to compete with brick and mortar banks by providing better services with fewer unnecessary fees.
Arival aims to differentiate its banking services in several ways.
First, it wants to be the bank for “abnormal” clients – IE crypto/blockchain-based firms which may struggle to gain access to banking services.
Second, it is interesting to note that Arival is applying to receive a US banking license via Puerto Rico – a US territory with a unique international banking law. “International Financial Entities” (IFE) are governed by US federal authorities and may gain access to the Fed but comes with interesting features such as a 20-year tax exemption on all income earned and a 4% tax rate on corporate profits, according to Arival’s investor deck. There is more information available on the IFE here. Arival applied for the license in April 2018 and hopes to receive approval next month (October 2019). At the same time, Arival has applied for licenses in both Lithuania and Malaysia (uncertain which license).
A recent comment on the SeedInvest offering page asked if Arival will cancel the offering if it fails to reach the minimum hurdle. Arival had this to say:
“We currently have larger ticket investments going through the final stages of being reflected on the platform. We hope to have the raise total updated by the end of this week, which will effectively have us surpass the minimum investment goal.”
Founder Jeremy Berger says Arival “plans to be the leading digital bank for a new generation of SMEs within 24 months.”
The bridge offering is scheduled to close within the next ten days – unless it is extended.
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