Any solution that offers founders a new method to build and scale their business will be a positive contribution to the innovation economy, and Clearbanc has just received some serious support of their model.
The Toronto-based Clearbanc has raised $70 million USD a large group of investors, including Emergence Capital, Social Capital, CoVenture, Founders Fund, 8VC, iNovia Capital, Real Ventures, Portag3, Precursor, WTI, Berggruen, and FJ Labs. Santi Subotovsky, a partner at Emergence Capital, will join Clearbanc’s board of directors.
Clearbanc was made to give new founders and entrepreneurs better access to the capital they need to grow without personal guarantees, warrants, or equity. A specialized system scans the publicly available data a company has online—via platforms such as Stripe or Facebook—then gauges their financial health and the trajectory they are on. If a company qualifies, they can receive capital in as little as a day in what’s called a capped revenue share deal.
A revenue share deal means the companies only pay back the borrowed money as they earn their own revenue. There is no set repayment date and no compounding interest or ownership that trades hands, however, there is a six per cent fee. Clearbanc can provide a company with amounts between $5,000 and $10 million.
“I saw hundreds of entrepreneurs on Dragons’ Den every year, who had great businesses but needed a better funding model,” said Michele Romanow, co-founder and a dragon on the aforementioned CBC show that sees founders bring new ideas to a group of savvy investors. “Whether an entrepreneur needs $10 thousand or $10 million, we started Clearbanc to serve them efficiently and scale in a manner other investors cannot.”
Clearbanc’s portfolio has grown by over 100 per cent each year. The majority of deals Clearbanc closes involve the money going towards digital marketing campaigns.
“This is a landmark year for us. We’ve funded over $100M in marketing capital for over 500 e-commerce brands already in 2018,” said co-founder and CEO Andrew D’Souza. “Clearbanc not only puts the power back in the hands of entrepreneurs—rather than investors and banks — but also plans to fund millions of small businesses globally instead of the small handful that most investors typically fund in a year.”
Just over a year ago, Clearbanc launched Chrged, an accelerated solution to provide companies with capital to take advantage of Facebook’s marketing oppurtunities.