Clearco Secures $215M Funding from SoftBank

Clearco Secures $215 Million in Funding Led by SoftBank Vision Fund II

Clearco, a Toronto-based fintech company specializing in capital provision for online businesses, has successfully raised $215 million in a funding round spearheaded by SoftBank Vision Fund II. This financial event concluded shortly after Clearco finalized a previous $100 million funding round, which resulted in a valuation increase to $2 billion.

A Shift in Investment Philosophy

The current trend of startups receiving successive funding rounds is widely observed. However, SoftBank’s participation is particularly noteworthy. The Japanese conglomerate, historically recognized for substantial, high-profile venture capital investments, is now allocating funds to a company founded on a contrasting principle: providing alternative financing options that enable founders to circumvent traditional venture capital.

Co-founders Michele Romanow and Andrew D’Souza acknowledge the differing approaches of the two companies, yet believe a synergy between them facilitated the deal’s completion.

Recognizing a Complementary Approach

“Their objective was to reimagine how venture capital operates,” explained D’Souza. “They recognized our efforts at the opposite end of the spectrum – leveraging technology to empower thousands of entrepreneurs – and that’s what truly resonated with them.”

Two years prior, Clearco, initially known as Clearbanc, introduced “the 20-minute term sheet.” This platform allowed e-commerce businesses to access non-dilutive marketing growth capital ranging from $10,000 to $10 million, based on their revenue and advertising expenditure.

Rapid Deployment and Expansion

The company demonstrated a capacity for swift capital deployment, driven by data analysis. To date, Clearco has invested over $2.5 billion in more than 5,500 companies.

Over recent years, Clearco’s core message has evolved. According to D’Souza, while rapid, affordable, and “unbiased” capital remains a key attraction, the company is now concentrating on “the technical challenge of delivering personalized guidance and the support typically provided by an engaged investor, board member, or advisor, but at a scale encompassing thousands and millions.”

Expanding Product Offerings

This shift in focus is reflected in the company’s product development. In the past year, Clearco launched ClearRunway, designed to assist SaaS founders in securing non-dilutive capital through revenue-share agreements. They also introduced a valuation tool, inventory buybacks, and ClearAngel, an alternative financing platform for early-stage founders with limited revenue.

Future Growth and International Strategy

The newly acquired funds will be utilized to facilitate Clearco’s expansion into new geographical markets beyond Europe, Canada, and the United States. The international strategy will also incorporate mergers and acquisitions, particularly as competitors emerge in developing markets.

Having transitioned from an anti-VC tool to a comprehensive founder and capital services platform, Clearco’s assertive international vision may be a significant factor in its appeal to SoftBank.

A Vision for Global Impact

“We believe we can support a million founders globally by extending this alternative financing model to every country,” stated Romanow. She contrasted this with Masayoshi Son’s approach – investing $100 million in 100 companies – noting that Son remained silent for the first eight minutes of Clearco’s pitch, demonstrating attentive listening rather than immediate skepticism.

SoftBank’s Evolving Investment Strategy

Despite its previous reputation for bold investments, SoftBank’s investment strategy appears to be undergoing a change. According to Nikkei Asia, SoftBank Vision Fund II has an average investment size of $152 million, significantly lower than the $931 million average of Vision Fund I. However, the publication also reports that the conglomerate is accelerating its investment pace, aiming for one new deal per day.

The investment in Clearco indicates that SoftBank believes that reshaping venture capital involves increasing the available options for founders.