Reality TV Star’s Alternative Lender Gets Top Canada VC Funding

(Bloomberg) -- Alternative lender Clearbanc has raised $300 million in new funding, the largest disclosed venture-capital financing this year in Canada.

The new round of financing was led by Highland Capital Partners of the U.S. and includes Montreal-based iNovia and Emergence Capital of California and brings total financing at the four-year-old firm to $420 million, co-founder Michele Romanow said.

Toronto-based Clearbanc will use the money, along with revenue, to expand its business and offer $1 billion in funding for startups, for which it takes a cut of future sales.

“We've now raised enough capital to be able to fund our target this year,” Romanow said in a phone interview, adding the process has increased her empathy for entrepreneurs trying to find backing. “Even if you're good, even if you've founded many companies before, it is so difficult to raise money. It is hundreds of meetings, it's constantly pitching, constantly on airplanes, constantly doing due diligence.”

About C$1 billion ($761 million) was invested over 142 Canadian venture-capital deals through the first quarter, according to the Canadian Venture Capital & Private Equity Association. The biggest after Clearbanc was C$115 million for Vena Solutions Canada Inc., which provides spreadsheet management.

Clearbanc offers e-commerce startups $10,000 to $10 million through a merchant-cash advance model. Its portfolio of more than 1,000 brands, including rental fashion service Le Tote and online store Public Goods, is on track to generate more than $1.5 billion in revenue this year.

The new capital will be used to expand Clearbanc's sales and engineering teams in Toronto and to make funding available to companies in international markets such as Latin America and Europe, Romanow said.

Clearbanc said it has funded eight times more companies founded by females than the average 2.2% of U.S. venture capital that goes to women, as its model makes automated investing decisions, assessing the financial performance of a company, ignoring gender, race, or location.

“That's really I think democratized some of the access to capital,” said Romanow, who's appeared on “Dragons' Den” -- the Canadian version of “Shark Tank” -- a television show in which investors get pitched business ideas by contestants. She has founded several companies herself, including SnapSaves, which was acquired by Groupon Inc. in 2014.

To contact the reporter on this story: Paula Sambo in Toronto at psambo@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, ;Jacqueline Thorpe at jthorpe23@bloomberg.net, Chris Fournier