With venture funding in doubt, A San Francisco Fintech is partnering with Stripe to offer startups an AI-driven twist on claims.

Fintech start-up finance specialist Arc announced the launch of Arc Treasury, a new banking platform developed in collaboration with Stripe, on Tuesday morning. Arc helps other companies finance their business by offering them prepaid capital from future income streams that do not require founders to share their equity. Arc’s main service, Arc Advance, relies on machine learning to guarantee financing offers algorithmically, and promises to deliver capital within 48 hours after a startup uploads the finances to Arc’s platform. With Silicon Valley powerhouses like Y Combinator advising startups to “plan for the worst” in the midst of technology’s bear market, Arc’s “lending services” should not be short of fresh applicants.

With the debut of Arc Treasury, customers will now have access to several financial tools, including bank accounts and expense analysis. Stripe owns and manages the relationship with the host bank Evolve, while Arc has built the user interface that startups can now use to access, deposit and use Arc Advance financing.

Startups offering business to business financial services have grown significantly over the past year, strengthened by the pandemic that is pushing more online banking services and by a healthy flow of venture capital. Several startups offering banking services for other businesses emerged Forbes’ annual Fintech 50 for the first time last week, including Novo, which specializes in offering small business accounts, and Creative Juice, whose digital banking app is aimed at content creators and which now also offers revenue-backed financing.

After going through Y Combinator and raising $ 11 million in equity and $ 150 million in debt financing, Arc was launched in September 2021. Since then, the company has attracted more than 100 paying customers, according to co-founder and CEO Don Muir, 30, who outlined the startup plan with President Nick Lombardo and CTO Raven Jiang while a student at the Stanford Graduate School of Business. Arc primarily caters to the start-up of business-to-business software, which makes up 95% of the customer base.

Arc’s first product, Arc Advance, offers an option for startups that would otherwise have relied on venture capital or traditional venture or private equity loans to raise funds. Arc fronts its customers 20-80% of their estimated future income over a specified period of time and requires full repayment, and discounts the advance by 5% to 12% of future income payments depending on the risk to the borrower assessed by the algorithm. This discount is the effective equivalent of an interest fee for the advance. Although not a technical “loan”, Arc’s advances work in the same way as unsecured credit lines. If one of the start-up customers has problems repaying the advance, Arc will be forced to extend the term of the advance, but unlike a traditional bank lender, it does not have the option of forcing a customer to go bankrupt.

Arc is entering an increasingly crowded field of fintech startups trying to offer banking services to other businesses. Brex and Mercury offer cloud-based financial platforms tailored for startups. ClearCo offers AI-assisted, non-dilutive capital; unlike Arc, however, it offers financing through debt financing. Pipe also offers startups that do not dilute, but do so by connecting them in a digital marketplace with investors who front the money.

“Verticalization is probably Arc’s biggest differentiator from some of the other names,” says Muir, referring to Arc’s offering both credit lines and deposit accounts to customers.

Despite the ongoing downturn in the capital markets for fintech startups, Arc has experienced its highest growth rate to date in the last two months, Muir said. Startups can use this resource because they are hesitant or unable to raise money in a flat or down round, which is becoming increasingly common in the current market.