A Capital Idea: Our Investment in Clearbanc
We’re delighted to announce that we’ve led Clearbanc’s most recent round powering a three-year-old company founded to provide flexible financing options to entrepreneurs with online businesses.
Not every business is the right fit for venture capital financing. Most venture funds – us included – only fund five to seven companies each year, expecting some percentage of their portfolio to grow and go public or get acquired in the next decade. Some startups and online businesses don’t fit this model. Founders may want to run their business profitably for years, keep their practice lean and focused, or pass it down to their children after retirement.
Traditional banks don’t fill the void either – each requires personal guarantees for credit and long application processes. Faced with less than ideal choices, entrepreneurs looking for working capital often end up bootstrapping their growth or compromising on their mission.
Clearbanc fits between venture capital and a traditional small business loan, providing financing that millions of entrepreneurs need to run their online businesses. They don’t require personal guarantees, warrants, equity, or even the team’s credit scores. Instead, Clearbanc measures a startup’s financial health by analyzing data from the platforms used by the business – typically Shopify, Stripe, and Facebook. Teams can get approved in just a day for anywhere between $5k and $10M in capital, and repay the capital as they scale revenue, with no set repayment date or interest.
The company’s co-founders, Michele Romanow and Andrew D’Souza, are the ideal team to lead and scale Clearbanc. They’re serial entrepreneurs and angel investors with first-hand experience of the challenges that startups encounter. Michele serves as one of the “Dragons” on the popular Canadian startup funding show, Dragons’ Den, where she regularly hears pitches from entrepreneurs hoping to convince a Dragon to invest in their business. Through their joint experiences, Michele and Andrew have met hundreds of entrepreneurs with great businesses that require non-traditional funding.
During our diligence process, we were continuously impressed their customer’s enthusiasm for the product and the results it helps drive. The owner of Vinebox, a wine discovery subscription service, was able to grow his business by 500% with the capital he received from Clearbanc.
The demand for financing alternatives like Clearbanc is large and growing. In fact, the company is on track to provide more than $100M in funding to startups this year, and has financed 500+ high-growth online businesses in the past 12 months.
Startups play a huge role in our economy, driving innovation, fueling growth, and providing jobs to hundreds of thousands. Entrepreneurs can only succeed with financing options that work for their business. Clearbanc fills a huge gap that’s existed for years, and we’re excited to partner with Michele and Andrew as they help companies get the capital they need to scale.
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