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Forget VC money. This company wants to loan you up to $10 million

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Raising money is tough for all founders, especially if they aren’t in a chummy network. Eighty-two percent of companies receiving VC funding have all-male founders (typically two white dudes living in Silicon Valley), according to research by RateMyInvestor.

And if investors do take an interest, it usually means the startup has to give up a chunk of equity even just to fund so-called “repeatable growth,” like buying online ads. Founders can retain as little as 10% to 20% of the company, according to venture investor Fred Wilson of Union Square Ventures.

“It’s one thing when it’s funding R&D and product development and long-term investments. But when you’re funding repeatable growth, it’s a lot to give up,” says Andrew D’Souza, cofounder and CEO of fast-growing investment firm Clearbanc. “You can’t get that ownership of your company back.”

In place of demanding stock, Clearbanc takes a flat fee on the payback of investments up to $10 million. And in place of pitch meetings and schmoozing, Clearbanc approves or rejects candidates based on an online application. They even promise to make money available within three days to approved applicants. It’s not the only company to offer such services, but it stands out for its modest payback fees, which are as low as 6%.

Based in Toronto and founded in 2015, Clearbanc has financed over 1,000 companies to date, including mattress maker Leesa Sleep, fashion-rental service Le Tote, home goods company Public Goods, and shirtmaker UNTUCKit. And it’s about to finance a lot more. The company has just announced a $300 million funding round, led by Highland Capital, along with iNovia, and Emergence Capital.

Combining $250 million of that amount with other funds, Clearbanc promises to invest a billion dollars in 2019 in 2,000 companies, mainly e-commerce companies. That’s up from $143 million invested in 2018 and $17 million in 2017.

Clearbanc isn’t the first company to offer fixed-fee financing without taking equity, says Robert Le, senior analyst at PitchBook, a data provider for the........

© Fast Company