- Clearbanc has now raised a total of $US1 billion in capital to fund startups.
- The company offers startups an alernative to raising funds through a venture capital firm, giving loans (that don’t require an equity stake) with 6% interest that are repaid by taking a portion of the startup’s revenue.
Clearbanc, a company that provides non-dilutive funding to startups as an alternative to VC funding, has closed $US1 billion in capital (including the $US120 million it disclosed last year).
The bottom line: “Today, 40% of VC dollars in companies are spent on Google and Facebook ads,” Michele Romanow, co-founder of Clearbanc and an investor, tells Axios. “Founders are using the most expensive capital for this.”
- Instead of buying equity in a startup, Clearbanc simply charges a 6% fee for a loan. The startup shares a percentage of its revenue with Clearbanc until it’s paid back.
- Clearbanc uses data like a company’s Stripe transactions and Facebook ad conversions to vet potential investments. It mostly funds e-commerce startups with consistent revenue.
- Investors in Clearbanc’s funds include CoVenture, Upper90 and Social Capital (which debuted its own similar program in 2017 called “Capital-as-a-Service”).