Putting Entrepreneurs First: Clearbanc Pioneers Access to Fast, Affordable Capital
The exhilarating journey of founding a company is attempted only by the most daring, dedicated, and curious individuals. Most entrepreneurs obsess about building a world-class product to fulfill the needs of their customers and dream about creating value for an underserved group of individuals. Despite most founders’ desire to spend the majority of their time executing on their game-changing mission, the reality of running a company is that it needs financing to survive and grow. In the more developed technology ecosystems, founders’ attention is often consumed by acquiring high-profile venture capital as an ideal source of financing. On the other hand, there are many founders building impactful companies in smaller markets who simply have no access to traditional VC and must assume cumbersome personal debt to fuel their expansion plans.
Clearbanc’s mission is to help such founders win globally by democratizing fast and affordable access to capital. It has created a new asset class that better serves founders looking to fund repeatable growth, and is available to founders anywhere, anytime. Today’s announcement of Clearbanc’s $300M capital raise pushes the Company further towards shifting the balance of power back to the hands of entrepreneurs and allows founders to focus on building products rather than pitching investors or bankers.
Of course, venture capital serves a distinct purpose in technology investing. Typically VC’s take on significant technical and market risk as a company scales in exchange for a piece of the equity of the company. This makes sense as companies look to fund R&D, employee growth, market validation, and expansion. Traditional debt serves another unique purpose, to provide companies with working capital requirements and occasionally, to fund acquisitions and non-recurring investments. While equity and debt financing both have value for entrepreneurs, the increasingly digital native nature of marketing and operations have created an opportunity for a new source of capital to emerge.
Once a company invests enough in ad-spend on platforms such as Facebook, Google, Twitter and Snap, the return on ad spend and resulting unit economics reach a point where predicting repeatability can be estimated via a relatively novel exercise. Clearbanc has developed algorithms that allow it to evaluate that repeatability in under 20-minutes, and allocate capital against it within 24 hours. This is game-changing for founders as it allows them to fund their marketing budgets using a new source of capital that does not dilute their ownership or burden the balance sheets of their companies. As Co-Founder Michele Romanow has stated, “Our vision is, if Clearbanc is successful, there’s a world where founders can own a much greater percentage when they IPO.”
Clearbanc has truly been built by founders for founders. Andrew D’Souza and Michele Romanow have both built and exited multiple successful companies. They have instilled that seasoned founder mantra across the cultural DNA of Clearbanc. Every new employee is expected to partake in “Founders School”, prior to joining the company, to give them a true appreciation for the highs and lows of an entrepreneurial journey. This entrepreneurial culture is not only the internal lifeblood of the Company, but it is also reflected in the companies that use Clearbanc as a source of capital. Founders using Clearbanc have access to a platform of resources and fellow founders to help them scale and get the right level of mentorship and support. The Venture Partner Mentoring Network announced today is the embodiment of this approach. The network is another way to help founders access some of the brightest minds in the eCommerce world. This initiative will help foster a community of entrepreneurs and further extend the networks of all the companies using Clearbanc as a source of capital.
At Inovia, we are proud to have backed Clearbanc since the start. Check out our first blog post from the Series A announcement in November 2018. We are absolutely thrilled to play a role in improving the lives of founders across the globe.
