“Growth capital” provider Clearbanc has raised $300 million in Series B funding that will further propel the company in its mission to fund e-commerce entrepreneurs.
The company to date has invested in more than 1,000 brands including Public Goods, Le Tote and Leesa Sleep, which are poised to generate $1.5 billion in sales this year alone. This latest round of funding for Clearbanc, which is based in Toronto, brings the total invested to $420 million.
The equity investment is led by Highland Capital along with existing investors Inovia and Emergence Capital. The company said the financing facility was led by Arcadia Funds with participation from Upper90 Ventures. “Funding will fuel Clearbanc’s sales and engineering team expansion and scale the growth capital available to portfolio companies,” Clearbanc said, adding that Dan Nova, a general partner at Highland Capital, will join the board of directors.
Michele Romanow, cofounder and president of Clearbanc, told WWD that venture capital isn’t the best model for every business. She noted that if you have a product that sells for $50 and it costs you $10, “that’s a great business,” she said, but not necessarily a business that’s worth giving up equity to an investor.
Moreover, Romanow said it is time-consuming for entrepreneurs to seek funding. It’s an ongoing process that requires travel and presentations, which pull entrepreneurs from managing their business.
Clearbanc’s is a simple, flat-fee model where a revenue share approach is used to fund the growth of companies. “We have powerful predictive models that look at your revenue, ad performance and other third-party data to generate funding offers,” the company stated on its web site. “We don’t take equity, we don’t dilute your investors, we don’t take personal guarantees and we don’t do a credit check. Our offers are based on your performance.”
Clearbanc “deploys” between $10,000 and $10 million, in less than three days and then charges a flat fee that ranges from about 6 percent to 12.5 percent, “depending on how you spend the funds. This isn’t an interest rate, and this is not a loan. You always know how much you owe.”
Romanow said it might seem “counterintuitive to be raising capital, but it’s quite strategic — we’re raising more capital to build a new asset class,” she explained. “Equity is part of an entrepreneur’s toolkit, but we fundamentally believe it’s the wrong tool to fund the repeatable parts of your business like digital ad spend. We encourage companies to spend equity on technical risk and R&D, and that’s exactly where we’re putting this Series B.”
The company described its business as a “proprietary model” that “democratizes access to capital, making investment decisions without bias by assessing the financial performance of a company — ignoring gender, race or location of the brand.”
Romanow said at a time when just 2.2 percent of all U.S. venture capital “goes to female-founded companies and many states in the U.S. didn’t receive any VC at all, we have funded eight times the number of women and more states than any other traditional fund across the entire United States and Canada.”
Nova said Clearbanc is “democratizing access to capital in a way in which we have never seen before. Investing in Clearbanc is investing in entrepreneurship.”
In addition to the Series B, Clearbanc said it was also rolling out a “Venture Partner Network,” which give entrepreneurs “access to financial and strategic knowledge.”
“The network gathers some of the greatest minds in e-commerce, direct-to-consumer, B2B and venture capital,” the company said in a statement. “The program’s founding partners at launch include Gary Vaynerchuck of VaynerMedia, Jason Finger of Seamless & Upper90, Ryan Hoover of Product Hunt, Jack Abraham of Hims & Atomic, Jesse Horwitz of Hubble Contacts, Morgan Hirsch of Public Goods, Harry Stebbings of 20 Minute VC, Ruma Bose of Humanitarian Ventures, Jason Stoffer of Maveron, Rahul Vohra of Superhuman and Clearbanc’s own cofounder Michele Romanow.”
More members are expected to be added to the network over time.
Andrew D’Souza, cofounder and chief executive officer of Clearbanc, said most “founders don’t have access to the kind of advice and insight that VC firms can give. We’re launching our Venture Partner Network to offer mentorship and direction from industry veterans and level the playing field for founders all over the world.”
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