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Clearbanc, a fintech that puts money into other startups for a fee and a share of their revenue, is growing its war chest as it looks to convince startups to lean less on venture capital funding.
The Toronto, Canada, company is in talks to raise $100 million to $200 million at a $1.75 billion to $2 billion valuation, according to two sources familiar with the matter. The round is led by Oak HC/FT, a venture and growth equity investment firm.
The deal comes on the heels of a rival fintech, Pipe, taking in $150 million just three weeks after it announced a $50 million growth round. The latest round lifts its valuation to $2 billion.
Founded in 2015, Clearbanc invests in startups for a fee and takes a share of revenue until its investment is paid back. It’s different from a typical lender because there are no fixed payments or personal guarantees, and it’s not like a venture firm in that it doesn’t take equity.
The company had a banner year through the pandemic. It added more than 1,450 customers while startups rushed to raise more money to stretch their runways, Clearbanc told Insider last fall. The fintech also hired away a veteran banker from JP Morgan to become chief financial officer, and it trotted out a $645 million fund for investing in e-commerce startups in Europe.
The company last raised $300 million of Series B venture funding through a combination of debt and equity in July 2019 at an undisclosed valuation, according to Pitchbook.
The founders, Andrew D’Souza and Michele Romanow, have long positioned the company as a complement to venture capital funding, and not a replacement. The idea is that a fast-growing startup that has repeat spending in areas like inventory, sales, and marketing, can access the capital it needs, without having to give away equity and dilute the value of existing shares.
“We’re trying to make the process easier for founders and giving them more options to retain ownership of their business,” D’Souza, who is CEO, told Insider in an interview last fall.
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Source:: Business Insider