Clearbanc’s Dynamic Toronto Investment Hub

Every startup encounters a bit of turbulence through its first few years, and Clearbanc is no different. Entrepreneurs know it can be tough to find the right product-market fit. The real distinction, and perhaps the true indicator of long-term success, is how that company is able to rebound from the hurdles it encounters through its early growth stages.

Clearbanc found their way, but it wasn’t easy. Founded in 2015, the startup has been on a tear over the last six months after having to pivot business ideas two times within the past four years. Co-founded by Andrew D’Souza and Michele Romanow—who are now CEO and president respectively—Clearbanc has jumped around a bit in terms of focus. They seem to have landed on a solid business plan in the last 18 months as the company raised two separate funding rounds within a month of each other totaling $120 million.

Romanow’s name probably sounds seem familiar. As a serial entrepreneur, Romanow has built companies like Buytopia and SnapSaves, selling the latter to Groupon in 2014 after building its valuation up to over $25 million in under a year. A member of the 2019 Canadian Top 40 Under 40 list, Romanow is also a Dragon on CBC’s Dragons’ Den, a show where she was able to invest in explosive startups like Endy.

The exposure to rapidly-growing companies that Dragons’ Den offered allowed Romanow and D’Souza to recognize startup success stories, but it took a bit of shuffling around first. The company found its legs by funding Uber drivers and offering them cash advance payday loans. That idea landed Clearbanc in Y Combinator but lost steam quickly.

Around early 2017, Clearbanc turned to funding Airbnb hosts, providing them cash to buy new properties, furniture, and anything else they would need to earn new customers. That went great until regulations came down and scared off almost every Airbnb user from making formal agreements with the company. The Clearbanc team was forced to pivot once more.

Luckily, another co-founder and current VP of product Tanay Delima had been working with e-commerce companies on the side. The whole team realized that they could create a better solution for companies selling products online to scale. Instead of giving up equity and board seats to investors, they could engage in corporate revenue sharing, the technical name for what Clearbanc does now.

Growing a company is tough work, and Clearbanc created the 20-minute term sheet to address that challenge. Clearbanc invests between $10,000 to $10 million in companies with positive advertising spending, as long as Clearbanc’s algorithm has reviewed and verified the company’s revenue data. The company must then pay back 106 per cent of Clearbanc’s investment, plus a share of revenue each month until that investment is paid back.

Clearbanc has set a goal to invest $1 billion in non-dilutive capital before the end of 2019.

There is a heavy reliance on direct to consumer brands when it comes to companies Clearbanc funds—about 70 per cent. Another 20 per cent comes from online retailers who buy in bulk. Clearbanc has found themselves a niche as well with subscription boxes, finding them to be a great growth segment and easy to track in terms of success. Clearbanc is currently looking into B2B SaaS, mobile apps, and people who are just starting out with their online business as well.

One particular example of a unique Clearbanc customer is a candle company that launched on a Thursday and had $15,000 in sales by the following Wednesday. This is the kind of company investors would never touch, but they needed money to scale quickly, and Clearbanc was right there to give it to them.

With a business model like that, things are going well so far. Currently sitting around 100 total employees, Clearbanc’s office is spread between two floors and reaching close to 15,000 square feet. Expansion has been incredibly rapid—20 new employees are in the process of on-boarding, while another 37 will join in August, bringing the total to over 150 by the end of the year.

Clearbanc trains its staff in a unique way through something they call Founder School, the brainchild of D’Souza. Running every three months or so, the school is a series of workshops every new hire must go through and it focuses on familiarizing employees with Clearbanc’s secret sauce. Focusing on sales training, Founder School attendees must practice cold calls and conversations with leads, then receive feedback from peers, managers, and even the VP of sales.

“Founder School helps them understand our customer and the ideas we want to get across,” says Kent Fenwick, Clearbanc’s head of growth. “We want everyone to feel like if they met someone on the train, they can understand and convey how Clearbanc works and talk about it at a high level. It helps to instill that foundation.”

Every Clearbanc employee attends Founder School, not just the sales staff, who make up about half of the headcount. The other half consists of engineers, data scientists, marketing, and a large operations team that handles all of the cashflow.

At the start of each work week, a company-wide meeting is held to set goals and discuss what needs to happen. The goals are reviewed every Friday afternoon, holding each employee accountable.

One of the most interesting aspects of Clearbanc’s working culture comes from the energy every employee comes into contact with while chatting with e-commerce entrepreneurs. Inspiration is contagious, so Clearbanc knows that if their employees leave the company, it’s typically to start their own business. Clearbanc recognizes this, so if an employee does leave the company, they’ll try to work with them to fund their new startup and get them on their way. Clearbanc considers it a badge of honor if their employees leave to start businesses and enlist their help to scale.

The work culture at Clearbanc is reminiscent of many high-growth startups: A mix of intense energy and careful strategy. The engineers, operations team, and others occupy the top floor, while the sales team has its own floor down below. Growth has been so rapid that the sales floor is almost completely bare, save for workstations. Clearbanc needed room to expand and heard from another tenant that office space freed up, and within a week, Clearbanc was in. They knocked down meeting rooms to create more open space, and the minimalist exposed design captures the company’s meteoric success well.

The sales floor has a lot of the sales paraphernalia necessary to fit the mold, from a putting green and basketball net to a golden sledgehammer and championship belt. One employee’s desk also boasts two Union Jacks as he is responsible for working on Clearbanc’s U.K accounts.

Clearbanc has a few remote employees in New York City and San Francisco who work closely with the local venture firms. If a VC passes on a company, they will refer them to Clearbanc, who may then make an investment. After the company scales, Clearbanc will pass them back to the VC for further investigation.

Meeting rooms that survived the teardown are named after Clearbanc’s past codenames for business ideas. Squirrel is the moniker for the e-commerce idea, while Grizzly is Airbnb. The kitchen has enough coffee to fuel the energetic staff, along with energy and collagen boosters to give everyone a bit of extra pep. Snacks provide sustenance for the Clearbanc crew, though there may be an abundance of keto-friendly eats, as D’Souza and Romanow are both advocates of the diet.

Twice a year, the company goes on a retreat to a former nunnery near Buffalo. The staff all align on values and plan goals for the next six months, focusing on the pillars they need to achieve in order to scale and find new talent. They also know how to have a good time inside the office. In early June, the Toronto Raptors championship parade marched right under Clearbanc, flooding the street with millions of fans. To celebrate, the company invited an investor of theirs, iNovia Capital, to bask in the historic day. The VC’s partners showed up with supplies of champagne, ready to toast the city’s flagship basketball team and celebrate with their fast-growing portfolio member. Talk about a fun day at the office.

Growth and success create good problems, and as a company that is constantly expanding, Clearbanc is already looking for a new location. Ideally, they want the whole company to be together on one floor, allowing the sales team to chat with marketing and operations and streamline onboarding for clients. They actually expect to outgrow this office by the end of the year.

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