Clearco encircling the Drain

In 2023, Clearco might make headlines

The state of Clearco appears to be getting worse. According to rumours, CEO and co-founder Michele Romanow is about to step down. Mark Steinman, the chief revenue officer, was fired earlier this week. and that there will likely be more layoffs.

The book about the demise of BlackBerry by Sean Silcoff is currently being adapted for the big screen. The Clearco tale, in my opinion, is equally or even more compelling. There is still a lot to report. And the person to do it is Sean Silcoff. He should investigate the extravagant parties held on yachts, executive liaisons, and various working conditions.

 Clearco might make headlines in 2023

Michele has maintained a busy public persona over the past few months. It has been seen that the Financial Post, The Toronto Star, and Pamela Wallin have all written puff pieces. Although one of these acknowledges the widespread rumours that Clearco will soon be out of business.

They also bring up the well-known fact that 50% of the businesses funded by Clearco were founded by women, also 30% BIPOC. Well, consider me dubious about that. simply because a sample ought to represent the population from which it was taken somewhat. According to sources, there is not much evidence to support those figures.

Some might argue that while her ship is on fire, a PR campaign shouldn’t be a top priority. Others will argue that she is correct to make the most of the situation because the outcome is not in doubt.

Michele also seems to be stepping up her influencer career. Since I’m a huge fan of Pamela Wallin, as everyone knows, I listened to the entire hour-long interview. Michele discusses the difficulties of being an entrepreneur and how she never views a “No Parking” sign as a barrier. I’m excited to pen the following chapter in her illustrious career.

The way this story began, in my opinion, merits telling. By last Sunday, I had a preliminary draught that included some new information regarding Clearco, which I sent to the business at 6:40 PM for comment. Around ten o’clock on Monday morning, I started to worry that Clearco would disregard me and instead work with an established media relationship. In fact, this pattern had been seen before, with Michele Romanow quickly responding via Sean Silcoff of The Globe after Jon Victor of The Logic broke the story.

On Monday at 10:30 AM, I made the decision to release the first part of the article, which disclosed that Clearco had covertly raised money, including from its founders. I reserved the rest of the narrative. This would protect the insider information and show the company that I was serious. I admit that this was a little rash, like when a terrorist shoots the first hostage. The global head of communications for Clearco contacted me about 45 minutes after I sent the story:

“I noticed that you recently published an article that is obviously false and inaccurate. This was submitted at 7 PM and published at 10 AM.

You can see that they can respond quickly when necessary—within 45 minutes! He questioned when I intended to release the second section. I added by Tuesday. Additionally, I enquired as to what information in the article was false. Nick answered:

“The information you sent me and published is either speculative or seriously inaccurate… If it’s helpful, I’m happy to go through with our legal counsel why the article is defamatory.

Clearco chaos: $8 million from founders keeps business afloat

In Canada, Clearco has become a symbol of former unicorns with unsound business practises that are spiralling out of control. This year, the company is reportedly undergoing a significant restructuring that includes multiple rounds of layoffs. Late in September, the business completed a $23.4 million raise using convertible promissory notes with a one-year expiration date.

The founders appear to have contributed $8 million from their base in Barbados. In contrast, the company raised $150 million through the issuance of preferred shares in the early 2021 boom period, and there is no indication that the founders participated. Even though the company eventually had a $2 billion valuation, I don’t think it still qualifies as a unicorn.

Inovia contributed $4 million to this most recent round of financing, but it doesn’t seem like Softbank bet the farm. Pranit Tukrel, the company’s head of corporate development & strategic finance, appears to have been parachuted in by Inovia in May. You can infer something from the fact that this otherwise well-known company made no fuss over this most recent financing.

For a quick recap, Clearco loans money for receivables to online businesses, primarily e-commerce firms. Clearco can see how these borrowers are doing financially by connecting to live data points from them (like their Google ad spend).

This enables Clearco to use algorithms to make lending decisions more quickly. Compared to traditional VC, Clearco can boast of funding clients who are more representative of the general populace due to the use of such objective models.

I worry that if Clearco fails, the heteronormative patriarchy will claim victory and these underrepresented groups may be unfairly maligned by association because CEO Michele Romanow has been quite vocal about this.

While it is admirable to support underdogs, I believe Clearco overstepped its bounds when it opposed a long-standing discriminatory practise of the lending sector that involved only lending money to creditworthy borrowers with a net positive interest margin. The technological angle is proving to be flimsy, and the unchangeable rules of credit underwriting are coming into play.

This week, paid subscribers will receive a more comprehensive update on the business; I just wanted to get the inside information. Sean Silcoff has reportedly been outdone three times on Clearco news, which by itself could be the biggest tech story of the year.

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