Clearco announced several recapitalization efforts Wednesday, including a $60 million Series D round and new asset-backed financing. The facility provides up to $100 million in financing capacity and will support $850 million of Clearco originations over the next two years.
Toronto-based Clearco uses AI and proprietary machine learning-based technology to underwrite businesses and help customers fund inventory and marketing invoices of between $10,000 and $2 million. To date, the company has financed over 10,000 companies with more than $2.5 billion.
The company was founded as Clearbanc in 2015, and provided capital to e-commerce founders growing their businesses without equity dilution, hidden fees or compounding cost of capital.
The recapitalization marks a turnaround for a company that’s had its share of ups and downs over the past year. However, after the original story went out this morning, I was tipped that some layoffs occurred Wednesday, suggesting the company's "downs" are not over yet: The company confirmed via email that it was not a mass reduction in labor, but that it did let go of six employees in what it called, "a single-digit restructuring for redundant roles." The company also said "we are moving into growth mode and have an open headcount of approximately 10 roles. This was a very small restructuring as we recalibrated the business after the transactions closed."
That’s when Andrew Curtis, who joined the company in July 2022, was named CEO. He told TechCrunch that his goals when stepping into the role were “to put Clearco in a better position to serve its customers.” He then set about restructuring the company over the last 12 to 15 months.
During that time, Clearco pivoted its product to focus on its Invoice Funding product, offering predictable payment amounts, on average between four and six months, and terms that are easy and hassle-free, Curtis said.
“We’ve been doing well,” Curtis said about the current status of the company. “This new series of transactions put Clearco in an incredibly strong position to provide e-commerce customers with growth capital they need to fuel their businesses. It also puts us in a strong position, both operationally and financially. It's been a lot of work, but it's an extraordinary outcome.”
Curtis also called reports that the company was nearing a shut down, "wildly inaccurate," and that Clearco had worked over the past year to make the business "sustainable and scalable."
Meanwhile, the Series D round was led by existing investors Inovia Capital and Founders Circle Capital. Clearco closed its new asset-backed facility with alternative asset management firm Pollen Street Capital. A $100 million Series C in 2021 put Clearco's valuation at around $2 billion. Curtis would not comment on the current valuation.
Adding to that, in August, a group of investors, including Inovia Capital and Founders Circle, purchased a $60 million term loan Clearco had with Silicon Valley Bank in Canada.
The company is coming out of a quiet period, according to Curtis. During that time it has been slowly rebuilding its originations after experiencing a similar slowdown to fintechs. He declined to share specific revenue growth, but did say the new financing vehicles will enable Clearco to generate free cash flow and scale toward profitability.
With the new Series D capital, Curtis intends to deploy the new capital into running the business. His goal is to break even in the next 12 months and said "these transactions are the first step in this process. This allows us to originate at significant volumes and operate with rigor and discipline."
With venture capital funding down much of this year, Curtis said Clearco’s recapitalization comes at a good time for startups, especially e-commerce businesses, that are facing, among challenges, reduced access to capital.
“That's really critical these days because interest rates have moved up a lot,” Curtis said. “Central banks have tightened monetary policy and the capital our merchants have access to is more expensive, and it's also gone down. It's a challenging time for small business owners, and we're just really delighted that we've been able to accomplish all these complicated transactions so that we can serve those merchants better in the future.”
Updated at 1:25 p.m. PST to report that six employees were let go on Wednesday and to add related comments from the company.