Arival Bank, a digital-only challenger bank, has closed its crowdfunded bridge round (preferred equity) on SeedInvest-Crowdcube. Arival is the creation of a VC firm based in Singapore that claims 20 investments & multiple exits.
The securities offering was a cross-Atlantic crowdfunding offering via the two platforms which established a partnership some time ago to share certain offerings. A quick review indicates that about £330,000 was raised via the Crowdcube platform. The pre-money valuation was set at USD $15 million, according to SeedInvest.
Arival Bank is seeking a banking license via Puerto Rico – a US territory with a unique international banking law for “International Financial Entities” (IFE). Arival wants to provide a Fintech bank for a “new generation of small and medium-sized companies” unburdened by past geographic constraints. If the license is approved, Arival states it will “go-live” next month (October 2019).
“The underbanked SME industry is a combined trillion-dollar industry. Freelancers, startups & SMEs present a real demand for banks, which has yet to be met. This is a relatively untapped market (especially in the US). It is likely innovation in the SME space will continue to grow, which means more of these businesses and entrepreneurs will be seeking forward-thinking fintech partners to meet their banking needs.”
As many observers know, the digital banking sector is a red-hot segment of Fintech with many early entrants garnering billion-dollar valuations. Arival is not there yet but it obviously hopes to be at some point in the future.
Arival has publicly stated that it intends to launch a Series A round to raise around $10 million at a possible valuation of $50 million – all predicated on being approved by the authorities in Puerto Rico.
Arival also claims that its waiting list of clients is “extremely large in terms of assets & transaction volume.”
The company’s plan is to “build the most profitable digital bank within 3 years.”
Of note, the offering on SeedInvest was only open to accredited investors under Reg D 506c. A minimum investment was set at $10,000. In the UK, crowdfunding platforms are not hampered by such delineations. Anyone could invest in the aspiring digital bank.
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