Clearbanc is disrupting startup funding by providing companies with cash to buy ads in exchange for a revenue share so they don’t have to sell as much equity to venue capitalists. That idea has proven so appealing that 1000 companies seeking up to $1 billion total hit up Clearbanc since we reported it raised $70 million last month. So to meet the demand of the most eligible startups asking for marketing cash, Clearbanc has just raised a $50 million fund from Seamless co-founder Jason Finger’s new firm Upper90.
If a company’s Facebook ads and Stripe sales metrics show it’s a sure bet, Clearbanc can provide $5,000 to $10 million in funding to pour fuel on the fire. Startups invest that into ad spend, and then split the revenue with Clearbanc from the sales triggered by those ads. Essentially, Clearbanc offers an alternative to selling valuable equity and control to venture capitalists by offering capital based on new data sources traditional banks aren’t looking at.
“In 2018, Clearbanc has funded over $100M into 500 different companies. Our portfolio companies are putting that capital to work and growing at over 100% year over year on average” co-founder and CEO Andrew D’Souza tells us.
To back the investments, Clearbanc raises sub-funds from LPs who earn a return through a slice of the revenue sharing deals. Part of the last $70 million was used to set up the first Clearbanc fund, and the whole $50 million being announced today is the second fund. Clearbanc expects the funds to mature and pay out after just two years, offering LPs a faster return then typical eight-year VC funds.
D’Souzas wouldn’t say exactly how much Clearbanc has raised in traditional equity for itself, but revealed most of the $70 million round’s investors were buying standard equity and it has some flexibility in how it applies some of the funding.