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Illustration: Axios/Lazaro Gamio

Venture capital has certainly fueled some truly impactful companies over the years (Apple and Google, for instance) — but what if it's not the right funding mechanism for all companies?

The backdrop: Clearbanc, a San Francisco- and Toronto-based startup, just raised a fresh $50 million (in addition to the $70 million it raised last month) to be an alternative to equity investing for certain companies, mostly e-commerce businesses. The idea is that these companies shouldn't be giving up precious equity just to fund their proven customer acquisition activities.

How it works: After Clearbanc's proprietary tools analyze a company's internal data, such as its Stripe transactions and Facebook advertising campaigns, Clearbanc disburses funds to the company, which then has to repay it back, plus about a 6% fee.

  • "Equity is ultimately risk capital" that should be used to research and develop new tech or businesses, Clearbanc co-founder and CEO Andrew D'Souza told me. And for e-commerce businesses that won't ever provide the type of returns that VCs expect, it's better they keep their equity and build their businesses.
  • Emergence Capital partner Santiago Subotovsky, who led the firm's investment in Clearbanc and sits on its board, agrees, which is why he doesn't see this as being competitive with his own industry.
  • On the other hand, Hustle Fund partner Elizabeth Yin wonders if eventually it'll mean that such alternatives will lead to adverse selection — early companies still searching for a business model or marketing strategy will be the ones asking for VC investments while their peers with cashflow avoid it.
  • This year, Clearbanc has doled out more than $100 million to over 500 companies, D'Souza says. Most of the funding it's raised went into two funds it manages to finance its customers, and a small portion has been invested into its own operations.

Go deeper

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sidney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.

Off the Rails

Episode 5: The secret CIA plan

Photo illustration: Aïda Amer, Sarah Grillo/Axios. Photo: Zach Gibson/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 5: Trump vs. Gina — The president becomes increasingly rash and devises a plan to tamper with the nation's intelligence command.

In his final weeks in office, after losing the election to Joe Biden, President Donald Trump embarked on a vengeful exit strategy that included a hasty and ill-thought-out plan to jam up CIA Director Gina Haspel by firing her top deputy and replacing him with a protege of Republican Congressman Devin Nunes.

Updated 6 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: CDC director defends agency's response to pandemic — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Empire State Building among hundreds to light up in Biden inauguration coronavirus tribute.
  3. Vaccine: Fauci: 100 million doses in 100 days is "absolutely" doable.
  4. Economy: Unemployment filings explode again.
  5. Tech: Kids' screen time sees a big increase.