Venture Capital: Clearco, Which Offers Equity-Free Capital To Startups, Raises $215M

Clearco’s innovative funding model is equity-free and repayable through a fee+revenue sharing agreement.

That model is clearly working because Clearco has so far paid out $2.4 billion to 5,500 founders in the e-commerce, mobile app, and enterprise software segments. Today (July 8, 2021) the company said it raised $215 million in an equity funding round led by SoftBank Group Corp’s Vision Fund 2. (Reuters)

Clearco will use the money for international expansion. The round follows an April raise of $100 million in equity and $250 million in debt at a valuation of nearly $2 billion.

To date, Clearco has raised over $681 million according to Crunchbase. The company is based out of New York, London, and Toronto, and was launched by Canadian entrepreneurs and investors Andrew D’Souza and Michele Romanow in 2015.

Clearco: How it works

Clearco is a provider of alternative finance in the range of $10,000 to $10 million to startups that have assured streams of recurring revenue. Startups that do not want to dilute their equity usually avail of this kind of financing.

They can apply for funding by entering their financial data into the firm’s system that automatically analyzes the data and comes up with recommendations using AI and data-driven decision-making. This process has enabled Clearco to break down the silos and bias in traditional VC funding.

“While global VC funding for female founders dropped by 27% in 2020, according to Crunchbase, Clearco funded eight times as many companies headed by female founders as traditional VC firms,” the startup said in a statement. “In that same timeframe, 13% of Clearco’s funding went to companies headed by Black and LatinX founders, compared to 2.6% for traditional VC firms; in total, a third of Clearco funding went to founders of color.”

Co-Founder and President Michele Romanow said Softbank’s investment came at an opportune moment as Clearco continued “to work towards removing archaic barriers and offer an alternative and accessible solution for founders all around the world.”

Related Story:  Clearbanc Founder on the Funding Slowdown at Startups (May’20)

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