E-commerce financier raises new capital, retires debt and raises new off-balance-sheet funding facility
Clearco has completed a complex recapitalization that has wiped out most of the Canadian e-commerce merchant financier’s US$2-billion-plus valuation – and left co-founder Michele Romanow, theThe company, officially called CFT Clear Finance Technology Corp., has raised US$60-million in equity, retired US$60-million in venture debt formerly held by failed Silicon Valley Bank’s Canadian unit, and raised a new US$100-million funding facility it can tap for advances to its merchant customers.
Those notes and the new equity were set to convert into senior shares that would value Clearco at US$200-million including cash, The Globe and Mail. Earlier investors who didn’t participate would see the value of their holdings squeezed to a fraction of their former worth. Mr. Curtis wouldn’t confirm details but said, “You can safely assume your prior reporting still holds.”
Tech valuations soared in the pandemic as people turned to digital channels to communicate, learn and do business remotely. That benefited Toronto-based Clearco, which offered unsecured advances to cover its clients’ marketing and inventory costs in return for receiving a daily cut of their revenues until advances plus fees were repaid. In the peak bubble year of 2021, investors – including SoftBank Group’s Vision 2 Fund –invested US$315-million in Clearco.
Despite the challenges Inovia partner and Clearco board member Karamdeep Nijjar, who helped lead the recapitalization, said ”what we saw was a really valuable asset that, with a bit of restructuring and the right capital structure to support it, would be very valuable. We looked at that through the lens of, ‘Do we think the risk is worth the reward?’ The more time we spent here, the answer was a resounding ‘Yes.
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