Clearbanc is currently testing out a new product in public beta, ClearAngel, that will allow companies at the earliest stages to receive revenue-share model funding from the Toronto-based company.
The offering significantly expands Clearbanc’s reach. Andrew D’Souza, co-founder and CEO of Clearbanc, noted that his company previously had to turn away 10 times more founders than it has backed prior to launching ClearAngel.
“We’ve invested $1.6 billion in more than 4,000 companies, but had to turn down ten times more founders than we funded.”
“We’ve invested $1.6 billion in more than 4,000 companies, but had to turn down ten times more founders than we funded because they didn’t meet our revenue threshold,” said D’Souza. “ClearAngel is our first product for early-stage founders from all walks of life who are seeing initial traction, but don’t have the experience or network to raise an angel round or get into Y Combinator.”
Like its original funding products focused on e-commerce and software-as-service (SaaS) revenue, ClearAngel uses artificial intelligence (AI) to collect data from companies that then provides insights on the companies status. Clearbanc uses that data to decide whether it will invest in the company. Clearbanc is offering to invest between $10,000 to $50,000 for two percent of these early-stage company’s revenue, over four years. Businesses need to be generating at least $1,000 a month and willing to take the business full time in order to qualify. Clearbanc is also touting this new offering as its first investment that comes with a 30-day “money-back guarantee,” where founders can return the capital with no obligation if they don’t find value in the first month.
In addition to receiving funding from Clearbanc, companies that use the new product are provided insights and advice, with ClearAngel acting as an “automated angel investor,” as Clearbanc is calling it. The AI platform analyzes the business’s daily data, comparing performance to other companies in order to tell founders how they might size up to their peers, and give specific “to do’s” to reach new customers and grow revenues. The companies also get access to Clearbanc’s network of partners, VCs, and vendors.
Clearbanc claims to have invested in 20 such early-stage companies through ClearAngel, and there is a waitlist to be a part of its public beta.
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ClearAngel is Clearbanc’s latest product that aligns with the company’s overall goal, to provide alternative funding options to startups. Since raising $300 million USD in July 2019, Clearbanc has consistently expanded its offerings in order to increase the potential size of its customer base.
In the fall, Clearbanc launched an inventory program, whereby Clearbanc purchases inventory directly from suppliers and companies pay back Clearbanc after customers buy their products, and, earlier in 2020, Clearbanc created a valuation solution that lets startups connect their online business accounts and receive a valuation report. Last year, Clearbanc also launched in the United Kingdom with an $853 million CAD (£500 million) fund targeted at British retail startups.
With ClearAngel significantly expanding the number of customers that Clearbanc can now fund, it begs the question of whether the startup plans to bring on additional capital to support the increase in loans. A spokesperson for Clearbanc told BetaKit the company “spun up” an entirely new fund of $10 million dedicated to CLearAngel, with plans to expand that fund as demand grows. “We had a big demand for this first fund and wanted to ensure we could onboard enough companies before expanding the size of the initial close,” the spokesperson stated.
Clearbanc is entrenched in the highly-competitive space of providing alternative funding for entrepreneurship. Other such offerings available to Canadian founders include Shopify Capital, which provides merchants loans ranging from $200 to $1 million, and Lightspeed, which partners with Stripe to offer financing options to small and medium-sized businesses to help buy inventory, invest in marketing, and manage cash flows, as well as FundThrough, a Toronto-based startup, which gives Quickbooks clients working capital using outstanding invoices. Amazon and PayPal offer similar working capital loans also based on a revenue-share model.
UPDATE 26/02/2021: This article has been updated with commentary from Clearbanc.