According to the Wall Street Journal, Morgan Stanley does not plan on renewing its membership with R3, nor does it intend to invest in the New York-based blockchain startup’s reported $150 million round of equity funding.
As reported yesterday, R3 has lowered its fund-raising target from $200 million to $150 million for its first major round of equity funding, while modifying the structure of the deal offered to its member banks. For instance, banks will now be offered a stake in R3’s development lab, a common roof under which its members collaborate to explore, research and develop blockchain solutions with R3.
As a part of the fundraising offering, R3 is reportedly setting up a new company that delivers its blockchain products to its members, who will also share a 90 percent stake in the company. The presumed terms will also see R3 at the helm of this company for a decade, along with its stake and returns from implementations of its blockchain-solutions.
With Morgan Stanley’s reported exit, three major banks have already or are due to exit the R3 consortium, arguably the most well-known collaborative effort of the financial services industry to explore blockchain technology. While it scarcely makes for an exodus, the WSJ source adds that the Bank of America, Barclays and UBS – all early members of R3 from last year – haven’t commented on whether they plan to invest in R3 for that equity stake, even though they remain a part of the consortium.
The report also reveals R3’s membership fee for its members, at $250,000 per year. R3’s valuation in summer 2016, as deduced by accounting giant Ernst & Young, is between $150 million to $200 million, figuring in membership fees of its 42+ member banks at the time (that number now stands near the 70 mark) and expected revenues from its blockchain products in the future.
For its part, R3 has said that departures were to be expected as the consortium evolves over time.
A spokesman for the blockchain startup said following the departure of Goldman Sachs:
Developing technology like this requires dedication and significant resources and our diverse pool of members all have different capacities and capabilities which naturally change over time.
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Last modified: March 4, 2021 4:52 PM