In the wake of a US $ 100 million funding round that made Clear Finance Technology Corp. Unicorn Status, the online merchant finance company has raised an additional US $ 215 million in equity from a group led by global powerhouse SoftBank Group Corp.
Now operating under the Clearco brand – formerly Clearbanc – the company was founded by entrepreneurs Michele Romanow and Andrew D’Souza, who are life and business partners. They were in the final stages of closing their most recent funding round in April, which valued the company at nearly US $ 2 billion, when Tokyo-based SoftBank called, puzzled by Clearco’s efforts to launch a new type of loan focused on small business technology.
“They approached us,” Ms. Romanow said. “They were introduced to us and they had heard what we were doing and were just very excited.”
The deal progressed quickly, culminating in a Zoom call with Masayoshi Son, the maverick founder and CEO of SoftBank.
“It was fast, it was intense,” Mr. D’Souza said of the call. “We spent a lot of time thinking about what this [company] could be.”
This is SoftBank’s first investment in a Canadian company from its Vision 2 Fund. Intuit Inc., Bow Capital and Park West Asset Management LLC join in the financing of Clearco.
Clearco offers cash advances to online merchants – primarily to spend on marketing – through digital channels such as Facebook and Google. It receives a small percentage of the income from it until the advance is repaid, plus a premium of at least 6%. To date, Clearco has provided approximately US $ 2.4 billion to 5,500 companies.
For entrepreneurs, these funds can be cheaper and more expensive than getting bank loans or venture capital or accumulating credit card debt. Potential customers give Clearco access to the business data of their bank accounts, online payment processors and online advertising accounts. Clearco then analyzes this data to predict future revenue and cash flow, generating automated decisions about which companies to fund.
This data-driven approach was appealing to SoftBank, which has a strong track record of aggressive betting on companies with the potential to dominate the tech and e-commerce categories. This has included hugely successful investments in companies like Alibaba and food delivery service DoorDash, but also big hiccups in companies like co-working startup WeWork and bankrupt inventory finance specialist Greensill. Capital.
Clearco is growing rapidly – the company has 378 employees, up from around 300 in April – and the new funding will help accelerate its international expansion, particularly in Europe and Asia. “It’s being able to hire better people so that we can enter more markets both deeper and faster,” Ms. Romanow said.
The company also wants to leverage SoftBank’s experience as a global technology investment brokerage. “SoftBank has seen the scale we’re aiming for,” she said.
Investing in Clearco gives SoftBank a stake in a leader in an emerging category of alternative financing options for startups and small businesses. “Clearco is a market leader who has created an entire industry that is fiercely dedicated to democratizing access to capital and a full range of services that serve the founder’s journey,” said Kristin Bannon, director of SoftBank Investment Advisers, in a press release sent by email. .
The SoftBank funding is an extension of Clearco’s latest funding round, which has attracted investors from U.S. technology companies such as Apple Inc., Airbnb Inc., Robinhood Markets Inc., Square Inc. and Stripe. Clearco declined to say whether the new funding changed its valuation.
Clearco finances its advances to customers with off-balance sheet debt. Although SoftBank’s investment does not include any new debt financing, having the SoftBank name associated with Clearco has opened doors in the capital markets, Mr. D’Souza said. “We are even more convinced that the availability and terms of this debt capital continue to improve. “
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