Blockchain Startup R3 Failed To Meet Revenue Goals By 13%, According To Forbes
A new report from Forbes claims that blockchain startup R3 failed to meet its revenue goals by 13%. By the end of the year, the company is expected to make up a little ground, but it will still miss its 2018 estimated revenue goals by approximately 10%.
Forbes also claims that previous estimates had the company missing its revenue goals by as much as 10x.
R3 had initially estimated revenues of $20 million for 2018. Last year, the company exceeded its target revenue by 11%. The profits from last year are expected to partially offset the miss from this year.
Overall, the Forbes report claims that R3 is facing a “rocky road” towards blockchain profitability.
Forbes cites the April 2018 budget document from the company, which they received as part of “an unprecedented handing over of financial documents” during a routine scheduled interview between Forbes and R3.
R3 is a blockchain startup founded in 2013. The company was built with the goal of revolutionizing the banking industry with blockchain from the inside. To date, R3 has raised a total of $122 million of venture capital.
David Rutter, the founder and CEO of R3, aimed to use his experience in the traditional banking industry to introduce blockchain to the banking industry.
“Contrary to some of the crypto-anarchist visions of overthrowing traditional financial institutions using technology similar to the blockchain that powers bitcoin,” explains Forbes, “David Rutter, R3’s founder and CEO, set out to change the system from within.”
To do that, Rutter used his “deep Rolodex of contacts” collected from his time as CEO of ICAP Electronic Broking LLC. Rutter gathered a consortium of global competitors that each had something to lose from blockchain’s promise of a world without banks – and each with something to gain if they worked together.
In other words, R3 was founded with a noble principle: to unite the world’s banks against the destabilizing power of blockchain technology by introducing blockchain first.
That all sounds good, but there were rumblings of trouble in the leadup to the consortium event. R3 was expected to launch a paid version of its open source software at the event, but they instead were forced to do damage control:
“Weeks before the consortium, which includes Credit Suisse, BBVA and State Street, was scheduled to launch the enterprise version of its Corda distributed ledger platform, a number of anonymous sources were reported as claiming the company was running out of money and would soon be on the auction block.”
“Instead of celebrating the imminent launch of Corda Enterprise, a pay version of the open-source software designed to cut out middlemen in a wide range of business processes, Rutter went into damage control.”
Rutter, to his credit, appears to be open and honest about his company’s financial information. Rutter handed over financial documents to Forbes in New York this past week. Those documents showed the company failed to meet its revenue goals through April 2018 by 13% after targeting revenue of over $20 million for the year. By the end of the year, they’re expected to miss that $20 million mark by about 10%.
The April 2018 budget document revealed to Forbes also reveals other useful information about the company. The budget document, for example, reveals that the company spent approximately 60.3% of its costs on compensation and 39.6% on organizational costs. The company also has a burn rate that, if Rutter is to be believed, is sustainable into 2020.
R3 also had 169 employees listed in the April 2018 budget document, although that number has since grown to 180 employees.
Ultimately, the blockchain industry is changing constantly. It’s hard to make and meet accurate revenue predictions. Forbes went to press with a headline saying,
“R3 Goes For Broke: New Financial Documents Show Rocky Road Toward Blockchain Profitability.”
It’s not necessarily good or bad news for R3 – but the company continues to be one of the most promising – and best-funded – names in the blockchain space.