Jul 31, 2019

VC alternative Clearbanc raises new $250 million fund

Illustration: Rebecca Zisser/Axios

Clearbanc, which lends money primarily to e-commerce startups for a flat fee, has raised a $50 million Series B round led by Highland Capital, and closed a new $250 million to finance companies.

Why it matters: Venture capital financing is not the right fit for every business, and it's an expensive way to finance recurring expenses like online ads.

  • While the fund is structured similarly to a venture capital fund (with limited and general partners), Clearbanc's funds only last 2 years instead of the common 10-year lifespan.
  • It's also much more similar to a fixed-income fund given its underlying model, says Clearbanc co-founder Andrew D'Souza.
  • "The other nice thing about being in the fixed-income category is that we don’t have the same incentives to grow," says co-founder Michele Romanow. "We’re not picking lottery tickets... We need all of them to grow, but we’re also not putting undue stress on the companies.”
  • Still, if a company fails, Clearbanc has to swallow the loss, says Romanow, adding that it's already happened to a number of businesses Clearbanc has underwritten.

By the numbers:

  • Most of Clearbanc's portfolio companies get more funds every one to three months.
  • More than 90% of companies have taken capital from Clearbanc more than once.
  • About 20% of companies have raised venture capital.
  • Companies can choose to repay back the capital via 1% to 20% of daily revenue — most choose 5% (Clearbanc charges a flat 6% fee).
  • On average, Clearbanc's portfolio companies generate $121 million in monthly aggregate revenue.

What's next: Clearbanc started by financing small-but-growing e-commerce companies, and says its new and larger fund will help it expand in multiple ways.

  • Internationally: Currently Clearbanc finances companies in the U.S. and Canada, but it has begun to test the waters in other parts of the world.
  • Bigger companies: Clearbanc has already started to lend to bigger businesses, like the mattress companies Leesa and Nectar and the fashion subscription box Le Tote.
  • New verticals: Next, it will focus on mobile apps with recurring revenue (a category that New York-based Braavo has been financing for a few years).

Go deeper

Cleo Capital debuts scout fund for female investors

Illustration: Lazaro Gamio/Axios

Cleo Capital, led by entrepreneur Sarah Kunst, raised $3.5 million for a debut fund that will invest in female entrepreneurs who act as scouts.

Why it matters: "There's a lot of response about diversity — gender and race — and there's a lot of conferences and panels and dinners celebrating or highlighting women in tech, but there hasn't been a change in where the capital goes," Kunst tells Axios.

Go deeperArrowAug 19, 2019

News aggregation app SmartNews reaches $1 billion valuation

Screen shot from SmartNews.com

SmartNews, the Japanese news discovery app that has amassed 20 million global monthly active users, has raised $28 million in its latest funding round, bringing the company's valuation to $1.1 billion, executives tell Axios.

Why it matters: It's notable that in today's bleak news market where U.S. tech giants like Google and Facebook dominate most news referral traffic online, a Japanese-based firm has been able to gain traction. SmartNews is one of the few news-related startups to achieve "unicorn" status, or a valuation of over $1 billion, in years.

Go deeperArrowAug 5, 2019

Tech companies slow stock buybacks as the China trade war bites

Data: Catalyst Funds; Chart: Andrew Witherspoon/Axios

Public companies are slowing their stock buybacks in 2019 from 2018's record pace, and the slowdown in the tech sector shows the trade war is beginning to hit the economy in unexpected ways.

Why it matters: "Given the state of the economy, what this really means is that companies are probably likely more concerned now than they were last year that conditions could get far worse and therefore aren’t too excited to start large buyback programs," Catalyst Funds COO Michael Schoonover tells Axios in an email.

Go deeperArrowAug 16, 2019