By Aisling Finn on Wednesday 2 December 2020
Founder and president of Canadian fintech Clearbanc Michele Romanow tells AltFi how the first few months in the UK went and what might be around the corner for the company.
Canadian fintech Clearbanc (not to be confused with its English namesake ClearBank) made waves when it first touched down in the UK back in October 2020, promising to invest half a billion pounds into British startups over the next year.
The alternative lender came with reams of success stories and a strong track record, no less from its president and founder Michele Romanow who is not averse to starting her own company, or five for that matter.
Clearbanc has continued on its mission to help the UK’s startups and is still on track to meet its initial promise of £500m invested in the next year.
AltFi caught up with Romanow (over Zoom) to see just how well Clearbanc’s first few months in the UK have gone and what she and her company might be up to next.
Serial entrepreneur Romanow is no stranger to starting her own company and knows just how difficult it can be, with funding often being one of the biggest stumbling blocks to many young companies.
“I am a serial entrepreneur, I’ve founded five different companies from a fishery on the East Coast to an e-commerce store to an app that was very early on in the AI space,” Romanow told AltFi.
“I had built three companies before anyone would give me money, either no investor was interested or the terms of the capital was so bad that it just didn’t make sense. And, so I understood that you go through this effectively begging journey where you’re constantly asking for capital and I knew there had to be a better way,” she went on.
Along comes Clearbanc. Founded in 2016 with her partner and CEO Andrew D’Souza, Clearbanc hopes to offer an alternative financing option for companies just getting off the ground.
“It’s now more important than ever that there are really good funding vehicles because the number one thing that holds people back is access to capital,” the CEO and president added.
The fintech uses AI to aid its decisioning and offers its customers a “first-of-its-kind” inventory funding whereby Clearbanc buys inventory upfront and companies only pay back the financing with a six per cent fee on top.
Clearbanc’s founder also admits that, despite having founded five successful companies in the past, including SnapSaves which was acquired by Groupon back in 2016, she struggled to get Clearbanc off the ground to start off with: “300 people on Wall Street told us we were crazy.”
Five years down the line, with more than $1bn invested into over 3,300 companies across North America and now the UK, it looks like Clearbanc is doing just fine.
As a female founder herself, Romanow sees the importance of supporting fellow female founders: “So many people are like, ok well we just need a female partner at our firm or something at the top of the funnel where we’re sourcing more female businesses.”
“Our approach has been very different,” Romanow told AltFi, “we don’t do anything at the top of the funnel, we let the data make the investing decisions for us.”
In an attempt to completely remove bias from its decisioning, Clearbanc uses AI to decide which companies to invest in and as a result, the fintech has funded eight times more female-founded companies as the industry average.
Romanow also revealed that that strong female ratio has remained stable over here in the UK.
“When you take the bias out of decision making you naturally fund more women and I think women have particularly suffered during this pandemic, nearly every woman with children has been struggling to work at the same time.”
Clearbanc is not just helping to support female founders across the US, Canada and the UK, but also businesses outside of the typical financial hubs.
Of the companies that Clearbanc has funded in the UK so far, 70 per cent of them hail from outside London, a ratio that you don’t tend to see from other VCs and lenders.
As well as being a successful entrepreneur in her own right, Romanow has also been a staple figure on Canadian Dragons’ Den for the past five and a half years, something that has impacted her journey with Clearbanc.
“Speed is one of the most important things for founders,” Romanow told AltFi, “founders don’t have time. I wish you could see my desk right now because my to-do list is so long. There’s just so much that needs to be done!”
“As a founder, there’s always things you want to be building and creating and no one goes into building a startup to be like: ‘I can’t wait to do fundraising’ or ‘I can’t wait to do accounting’. That’s not the fun of being a founder!”
On Dragons’ Den, Romanow and her fellow Dragons had just one hour to make a decision on whether or not they were going to invest in a fledgeling company.
The speed of Dragons’ Den has very much been carried over to Clearbanc’s quick decisioning times, with all applications being approved or denied within 48 hours, something important to Romanow given she knows just how little time founders have.
She told AltFi: “We’ve definitely continued on the speed of [Dragons’ Den] for sure. One of our number one values was making the process faster for founders and I think if we can give just a little bit of that time back that’s a really good thing.”
In another similarity to her fellow founders, Romanow laughs: “I’m pretty sure almost no bank CEO has ever run a small brick and mortar store and gone through the trials and tribulations attached to that.”
As well as offering its customers a chance to access alternative funding, Clearbanc is also working on building channels of communication between the companies on its roster and well-known players in the industry.
Romanow told AltFi: “If we can be there to support [small businesses] and give them, not only capital but a network of advice and support from other founders, other VCs etc. So much of what we do is to be more than just a source of capital.”
Under its VC partner programme, Clearbanc has held to connect over 100 companies to VC firms to help them grow and expand even further.
As for what’s coming up next for Clearbanc, Romanow remained fairly tight-lipped: “We are very ambitious now about international expansion given how well it’s gone in the UK.”
“The UK has been a great place to start but we do have our eyes set on European expansion, it all just relies on a combination of things such as e-commerce penetration, whether the country is English speaking or not and then regulatory environments. We're looking at countries close by but I can't give you more than that,” Romanow told AltFi.
Despite only being just shy of two months in, Clearbanc remains as ambitious as ever, setting its sights on even more coverage over the next year, continuing to found strong female-led companies and giving more time back to the founders on its books.