Clearbanc Rebrands as Unicorn: What You Need to Know

Clearco: Evolving Beyond Non-Dilutive Financing

For five years, Clearbanc has been a provider of non-dilutive funding for startup founders. However, the company is now shifting its focus and has undergone a rebranding process. This transition coincides with a successful $100 million Series C funding round, resulting in a $2 billion valuation.

A Significant Valuation Increase

The current valuation represents a fivefold increase compared to the valuation achieved during Clearbanc’s Series B funding in 2019. This substantial growth reflects the company’s expanded ambitions and evolving business model.

From Capital Provider to Long-Term Partner

Co-founders Michele Romanow and Andrew D’Souza explain that the rebranding to Clearco aligns with their long-term vision. They aim to offer data-driven solutions to founders, moving beyond simply providing capital.

“We are transitioning to a role where we leverage data, our extensive network, expert guidance, and financial resources to serve as a lasting partner to our clients,” D’Souza stated. Clearco intends to be perceived as more than just a source of funding.

Shifting Away from the 20-Minute Term Sheet

This announcement marks a departure from Clearco’s earlier emphasis on the “20-minute term sheet.” This product, well-known within the tech industry, enabled e-commerce businesses to secure non-dilutive marketing capital ranging from $10,000 to $10 million, based on their revenue and advertising expenditure.

To date, Clearco has deployed over $2 billion to more than 4,600 companies, demonstrating a rapid and data-driven approach to capital allocation.

Offering Comprehensive Business Support

“We not only provide capital efficiently, but also assist founders in strategically utilizing those funds to foster business growth and enhance overall value,” D’Souza explained. This holistic approach was a key driver behind the rebranding initiative.

Expansion of Product Offerings

Over the past year, Clearco has launched a series of new products:

• ClearRunway: Non-dilutive capital for SaaS founders, repaid through revenue-sharing.
• Company Valuation Tool: A benchmarking tool for founders to assess their company’s value.
• Inventory Funding: Upfront purchase of inventory from suppliers, repaid as products are sold.
• Clearangel: Similar to the 20-minute term sheet, but tailored for early-stage founders with lower revenue.

Navigating Challenges and Growth

The company experienced challenges, including workforce reductions in April 2020, impacting 8% of its employees (17 individuals). This led to a more conservative approach to capital deployment.

Despite these hurdles, Clearco has expanded its funding to $2 billion across 4,500 companies, encompassing both startups and established online businesses.

Financial Performance and Future Outlook

While currently unprofitable, Clearco generates approximately 6% in fees on repaid capital. With $1 billion deployed to companies last year, this translates to around $60 million in revenue.

Romanow acknowledged early missteps and high loss rates, emphasizing the importance of data-driven decision-making. The company is now focused on refining its data collection and analysis processes.

Balancing Capital and Mentorship

Clearco’s primary challenge now lies in consistently delivering valuable services and mentorship to companies, alongside providing financial support.

The Rise of Alternative Financing

Clearco’s success is closely linked to the increasing demand for financing alternatives to traditional venture capital. Similar to AngelList’s connection to emerging fund managers, Clearco’s growth is tied to founders seeking funding beyond initial seed rounds.

Simplifying the Funding Process

“Founders are driven by a desire to build and market exceptional products, not by the complexities of fundraising,” Romanow stated. “Our goal is to streamline the process and make it easier for them to focus on their core business.”

Venture Capital Backing a VC Alternative

The Series C round was led by Oak HC/FT, a traditional venture capital firm. This investment signifies a belief that the future of startup financing extends beyond conventional venture capital models.