Enterprise blockchain startup R3 is burning through cash at a breakneck pace and could be out of money by the first quarter of 2019, sources say.
R3 Could Be Out of Money by 2019: Report
Citing interviews with two former employees, Fortune reports that R3 — which in 2014 launched a high-profile banking consortium that sought to make blockchain technology palatable to the legacy financial sector — has run through nearly all of the $132 million it has raised from two funding rounds held since last May and has struggled to attract new investors.
The employees argue that a cocktail of excessive spending, poor hiring decisions, and an inability to develop a viable business model has led the company to bring in revenues that are “laughably off” targets.
The firm has also faced public setbacks as Goldman Sachs, Santander, and JPMorgan have dropped out of the consortium for various reasons.
Charley Cooper, a managing director at R3, denied the claim that it is running out of money in an interview with the publication, alleging that the company had actually exceeded revenue targets and has “more than sufficient funding” for the foreseeable future.
If the claim is true, however, R3’s last hope for survival may come from an unlikely place — a legal dispute with fellow blockchain startup Ripple.
Ripple Lawsuit R3’s Last Hope?
As CCN reported, the two companies had signed a high-profile partnership in 2016 that ultimately disintegrated, with each party claiming that the other failed to live up to its contractual obligations.
The argument revolves around a provision in the original agreement that gave R3 the option to buy up to 5 billion XRP from Ripple for $0.00085 per unit, or $42.5 million for the entire block. At the height of the XRP bubble in early January, those tokens were worth as much as $19 billion, and even after a sharp market reversal they still carry a value above $3.3 billion.
Ripple terminated the options agreement after it said R3 failed to fulfill its end of the deal, and R3 subsequently filed a lawsuit in an attempt to force the San Francisco-based firm to honor the options contract.
Ripple counter-sued, and each side has seen small victories as the dispute has worked its way through procedural matters.
It is not clear when the suit will ultimately come to trial or whether the two sides will reach a settlement agreement first.
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Enterprise blockchain startup R3 is burning through cash at a breakneck pace and could be […]