Intel and Big Banks Put $100 Million in Finance Tech Firm R3

Intel, Bank of America, and Wells Fargo have placed a big bet on a nascent technology that may shake up how financial firms transact. These companies, along with 40 others, have invested $100 million in R3, a New York-based consortium of financial firms that’s pushing blockchain-based software.

R3’s so-called distributed ledger technology helps businesses to agree on transactions and to keep digital records without need of an external middleman. It’s inspired by the blockchain, the decentralized accounting innovation at the heart of the cryptocurrency Bitcoin.

The funding round represents one of the largest investments in a blockchain-focused firm to date, according to data from CB Insights. Startups that have raised more include the digital payments company Circle, which has raised a total of $136 million, and the cryptocurrency broker Coinbase, which has raised nearly $120 million.

R3’s new funding, set to be announced during the annual Bitcoin and blockchain-themed Consensus conference in New York, marks the first two parts of a three-part “series A” round. The initial two parts were open only to members of R3’s consortium, which includes more than 80 participating firms. The company is expected to seek the final part of the investment, including from outside parties, later this year.

R3 said it would put its latest funding toward the continued development of “Corda,” the firm’s spin on a blockchain. The next phase of the project involves building a version that’s ready for big business. R3 open sourced Corda through the Hyperledger Foundation, the blockchain arm of the Linux Foundation, in November.

R3 designed Corda as a way for financial services firms to automatically execute legal contracts via software. The project uses a network of computers to handle business dealings faster and with fewer errors than present-day tech, so the thinking goes.

Rival blockchain projects include technology developed by startups Ripple, Chain, and Digital Asset Holdings as well as J.P. Morgan’s “Quorum,” IBM’s “Fabric,” and Intel’s “Sawtooth Lake.” No clear leader has arisen as the competitors jostle to become central in various use cases ranging from finance, to supply chain logistics, and more.

Charley Cooper, R3’s managing director, said that while banks have historically been at the mercy of external vendors for their technology needs, the industry consortium model that R3 is pushing means they can begin to set their own standards.

R3 will now be predominantly industry owned with investors controlling 60% of the firm, a person familiar with the deal’s terms told Fortune.

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The fundraising was conducted as a “bottoms-up fill,” meaning that investors were given the option to buy in initially at a base $1 million investment, and were then able to incrementally increase their level of participation, the next level being $2.5 million, and so on. The source did not disclose the highest level of investment, but mentioned that there were five or six tiers in all.

The fundraising negotiations led to the departure of several high profile consortium members last year, including J.P. Morgan, Goldman Sachs, Santander, Morgan Stanley, State Street, and Macquarie. Part of the reasoning behind the split, according to people familiar with the fallout, involved some banks believing that the group had grown too large to the point that they would be unable to wield as much control as they wanted.

Ather Williams, head of global transaction services at Bank of America Merrill Lynch, said in a statement that the bank was “excited about Corda’s potential” to “bring greater efficiency to the financial community.”

“We are on our way to becoming the new operating system for financial services,” said David Rutter, CEO of R3, in a statement, outlining his vision for Corda as the software glue that will bind financial firms in the future.

R3, which has 110 employees, will continue to collect membership fees from the more than 80 members that make up the consortium. The investors in the latest round are: