Toronto-based Clearco, a fintech capital provider for online companies, has raised $215 million in a round led by SoftBank Vision Fund II. The financing event closed just weeks after Clearco completed its most recent financing, a $100 million round that quintupled its valuation to $2 billion.
While the trend of rapid-fire, follow-on financing for startups is well-known these days, SoftBank’s involvement is notable for a meta reason: a Japanese conglomerate that was once known for flashy nine-figure VC checks is putting millions of dollars into a company built somewhat on the opposite ethos: alternative financing that allows founders to avoid venture capital altogether.
And while co-founders Michele Romanow and Andrew D’Souza admit that the two companies are on opposite sides of the spectrum, they also think the existing between the two entities led to a closed deal.
“Their business was to rethink the way venture capital is done,” D’Souza said. “They saw what we were doing on the other end of the spectrum, which was to use technology to thousands of entrepreneurs, and that’s really what resonated.”
Two years ago, Clearco, formerly Clearbanc, launched “the 20-minute term sheet,” a platform that allowed e-commerce companies to raise non-dilutive marketing growth capital between $10,000 to $10 million based on its revenue and ad spend. The founders then flexed rapid capital deployment based on data, and, to date, Clearco has put more than $2.5 billion in over 5,500 companies.
In the past few years, Cleaco’s messaging has changed. Per D’Souza, fast, affordable and “unbiased” capital is still a big reason why people come to the company, but they are now focused on the “technical challenge of how to provide personalized advice and the support you get from an engaged investor, board member, advisor, but at the scale of thousands and millions.”
The product map has followed this energy. In the last year, Clearco launched ClearRunway to help SaaS founders secure non-dilutive capital repaid through revenue-share agreements, a valuation tool, inventory buybacks, and ClearAngel, an alternative financing platform for founders with minimal revenue.
Today's money will be used to help Clearco grow to new geographies beyond Europe, Canada and the United States. Part of its international strategy will include M&A, as copycats emerge in emerging markets. While Clearco has grown from the anti-VC tool to a founder and capital services platform, its opinionated international energy may be what makes it a good deal for SoftBank.
“We believe that we can back a million founders around the world if we can take this alternative financing model in every country,” Romanow said. “Masa has a different model, which was to put $100 million in 100 companies,” she added, referring to Masayoshi Son, the billionaire at the helm of SoftBank. She noted how Son didn’t speak for the first eight minutes of Clearco’s pitch (which ultimately was the result of him paying attention, not questioning Clearco’s utility).
Despite SoftBank's previously garish personality, the group's investment strategy may be changing. Per Nikkei Asia, SoftBank Vision Fund II has an average check size of $152 million, far lower than Vision Fund I's average check size of $931 million. Still, the publication reports that the conglomerate has begun cranking up its investment cadence to one new deal a day.
With the Clearco investment, its clear that it thinks that rewriting venture capital will include adding optionality to it, as well.