Ecommerce investor Clearbanc has announced its launch in the UK to invest £500 million into online start-ups over the next year, helping them resource their operations and drive future growth. The company is also announcing a new inventory programme, where Clearbanc will purchase directly from inventory suppliers and the company only pays Clearbanc after customers buy their products.
The alternative capital platform – founded by Canadian Dragons’ Den star Michele Romanow and her partner Andrew D’Souza – has invested more than $1B into 3,300+ start-ups, and already invested £30M in British start-ups during beta. Combining AI and data science, Clearbanc offers UK companies an alternative to venture capital in the form of non-dilutive revenue-share agreements. Users connect their revenue and marketing accounts with Clearbanc’s APIs which shows founders their investment offers. Offers range between £10,000 to £10million with a 6-12% flat fee. This algorithm also removes bias from the funding process, with Clearbanc investing in 8x more female founders than traditional VC firms.
The new injection of capital comes at a critical time for UK start-ups as the surge in online shopping caused by the Covid-19 pandemic is expected to add £5.3bn to UK eCommerce sales this year — bringing the total market up to an estimated £78.9bn. During Beta testing in the UK, Clearbanc funded over 250 companies, 70% of which are based outside of London.
Michele Romanow, co-founder, and president of Clearbanc, said: “2020 has been incredibly hard for founders, but it’s also brought a ton of opportunities for online businesses. Consumer behaviour has completely adapted to this new way of life, and for companies to succeed in this new wave of shutdowns, it’s critical to capitalise on the rise of online traffic. It’s not as easy as building an online store — founders need the funding, data insights, and global network to grow. Clearbanc is the pioneer of alternative capital, backing more than 3,300 businesses, and the best partner to help UK founders reach new customers both at home and globally.”
The new programme, Clearbanc Inventory is designed to free up cash flow and clear the barriers founders face in scaling their business. The unique funding will buy inventory upfront and companies only have to pay back the financing with a 6% fee, so founders never have to worry about buying too much inventory and they can spend their money in more efficient ways. Today’s inventory system is a broken one that works against founders. eCommerce retailers today take upward of 50% in savings to buy the products from suppliers to sell, which means they have to make tough decisions about what cash is spent on marketing and other expenses. Already one of the most stressful times of the year, brands are attempting to capitalise on the accelerated shift to eCommerce and prepare for an unpredictable shopping season, all while ensuring product availability and avoiding “out of stock” scenarios.
Beyond funding, the launch means UK eCommerce entrepreneurs can now connect to the Clearbanc platform to receive a free weekly valuation of their business, meet reputable investors or buyers, see how their businesses compare to the competition in their category and access funding options.
The platform also adds value by identifying areas of growth that may have been previously overlooked, as well as ideas about where digital marketing spend is not as effective as it could be when compared to the performance of peer companies, making data-led recommendations on what to improve to reach new customers.