Andrew D'Souza, left, and Michele Romanow assume new roles at Clearco after ending their personal relationship and saying their professional ties remain strong.Christopher Katsarov/The Globe and Mail
The couple at the helm of one of Canada’s most heavily financed startups, Clear Finance Technology Corp., publicly acknowledged their romantic split Tuesday as they announced they are assuming new roles with the company.
Co-founder and chief executive officer Andrew D’Souza said in a LinkedIn post Tuesday he would assume the role of executive chairman, while president Michele Romanow – one of Canada’s best-known entrepreneurs and seed investors through her starring role on TV’s Dragons’ Den – will become CEO.
Michele Romanow’s Clearco cutting a quarter of staff as financier battles tech slump
Mr. D’Souza said in a video message the leadership change was “100 per cent my own decision” and attributed it to his realization “that as the company has grown, the role of the CEO has evolved beyond really what I feel is my zone of genius.” He also acknowledged what has been an open secret in Canada’s startup community for months: “Many of you know Michelle and I are no longer in a personal relationship, but our professional relationship is better than ever. She is the yin to my yang, she always has been, and I’m excited to support her.”
Ms. Romanow said in an interview the pair continue to have “a great working relationship” but said with the company doubling revenues to more than $100-million last year, expanding globally and reaching 500 employees, “at this size and scale you want to have a single decision maker. … Tactically it is not a giant shift and we are still extremely involved in the company. It is both our legacy and our net worth and we are very interested in making sure that this continues to be a success.”
Clearco, as the Toronto-based company is called, is operating amid heightened expectations after raising US$315-million in two separate nine-figure equity financings last year led by Japanese investment giant Softbank Group’s Vision 2 Fund and Greenwich, Conn.-based growth equity firm Oak HC/FT.
Other investors include Intuit Inc., Bow Capital, Park West Asset Management and Inovia Capital. The financings set Clearco’s valuation at more than US$2-billion – establishing it as one of a slew of new Canadian “unicorns,” or companies that reach US$1-billion valuations in private financings.
Clearco offers cash advances to online sellers funded by off-balance-sheet debt facilities to spend primarily on marketing on digital channels such as Facebook. Clearco receives a small percentage of the ensuing revenues until the advances are repaid, plus a 6-per-cent premium on the funds advanced, though the rate can run as high as 12.5 per cent if the advances are used for other expenses.
Several tech companies that sell business-management software to merchants also offer customer financing, including Shopify Inc. and Lightspeed Commerce. Clearco has tapped outside financiers including National Bank of Canada Credit Ltd. to fund its debt facilities, which give it the ability to originate more than US$1-billion in loans per year.
The financing offered by Clearco can be less onerous and expensive to obtain than bank loans, venture capital or credit-card debt. Customers don’t have to provide personal guarantees, give up equity or submit to credit checks. But they do have to give Clearco access to business data from their bank accounts, online payment processors and online advertising accounts. Clearco’s algorithms crunch the data to predict a company’s future revenue and cash flow, generating automated financing offers within minutes.
With their data-driven approach, Clearco’s founders claim they provide more equitable funding spread across more jurisdictions outside traditional tech hot spots than conventional venture capitalists. Clearco has now financed more than 7,000 founders.
In terms of the new working arrangement, Ms. Romanow, an operator who previously ran a caviar fishery and an online coupon service, will now oversee product management and development and engineering as well as the revenue-generation side of the business.
“My skill set is more suited to the environment we’re going into,” where heavily-funded startups that have chased big revenue growth must now show how they will become profitable, after a crash in valuations for publicly traded technology companies, she said. “The good news is I was a bootstrapped founder for the first decade of my career and certainly know how to run something that is capital efficient.”
Mr. D’Souza, meanwhile, will focus on communications, fundraising, investor relations, corporate development and recruitment. He pledged in his posting to “spend more time on this business than I ever have. I’ve got too much energy and ideas to sunset.”
This is Clearco’s second recent executive change; chief financial officer Curt Sigfstead left early this year for the same role with Themis Solutions Inc., another heavily-financed Canadian startup known as Clio that sells practice-management software to legal firms.
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Sean Silcoff