Andrew Curtis now CEO as company hopes latest exec change will lead to cash flow break-even in 2023.
Like her predecessor, Clearco’s Michele Romanow is stepping down as CEO of the company she helped found, BetaKit has learned.
The announcement to is expected to be made to employees Monday morning, according to sources that spoke to BetaKit under condition of anonymity. Along with that announcement will come the second set of significant layoffs for the company in the last year, a reduction of approximately 50 employees, just under 30 percent of the company. Clearco made a 25 percent staff reduction of 125 employees in July 2022.
Replacing Romanow as CEO is Andrew Curtis, a New York-based investment banker who has 20 years of experience in investment management and financial services. Curtis has been working with Clearco since last summer and will assume the role effective immediately.
Romanow is the second Clearco CEO to step down from the role in the last year. Then president, Romanow replaced fellow co-founder and former romantic partner Andrew D’Souza as CEO in February 2022 as part of a swap that saw D’Souza move to executive chair. Romanow will take on a new position as executive co-chair with D’Souza.
Clearco’s fortunes started to turn in 2022, with the company facing significant executive turnover and a changing economic environment.
Romanow is also not the only Clearco executive departing their role. CRO Mark Steinman is leaving the company to pursue other ventures, according to sources who spoke with BetaKit. With Clearco since 2018, Steinman previously held roles as the company’s head of capital markets, general counsel, and chief administrative officer.
Clearco was founded in 2015 by Romanow, D’Souza, Charlie Feng, and Ivan Gritsiniak. Originally an alternative banking product for Uber drivers named Clearbanc, Clearco rose to prominence as a debt lender for e-commerce businesses, specifically dealing in revenue share agreements.
Clearco experienced fast-paced growth over the last few years, attracting a plethora of venture capital along with it. The company reached a unicorn valuation in 2021, and has raised close to $400 million CAD in equity financing from the likes of SoftBank, Inovia Capital, Portage Ventures, Real Ventures, and Intuit. Clearco also secured more than $300 million CAD in debt to finance its loans.
At its peak, Clearco had more than 500 employees, adding new product offerings and expanding across North America, Western Europe, and Australia. As of August 2022, Clearco claimed to have advanced more than $3.2 billion to more than 9,000 brands.
“Our goal is to change the face of fundraising, and we’re really proud to be showing it can be done,” Romanow told BetaKit in April 2021.
D’Souza added that Clearco saw “a good opportunity” at the time “to actually double down and really start to scale, and sort of accelerate some of our plans.”
“We want to create an asset class that’s bigger than venture,” D’Souza said.
RELATED: Clearco hands overseas business to Outfund to focus on North American market
Clearco’s fortunes started to turn in 2022, with the company facing significant executive turnover and a changing economic environment.
The changes came early in the year, with none more prominent than the CEO transition between Romanow and D’Souza. Around the same time, Feng also departed to start his own company, while Gritsiniak transitioned to interim CFO following the departure of Curt Sigfstead to Clio.
“Our goal is to change the face of fundraising, and we’re really proud to be showing it can be done.”
– Michele Romanow
Like many other companies, Clearco also started to feel the effects of the changing economic environment. While Clearco initially continued with its international expansion strategy into mid-2022, it was simultaneously cutting staff in other newly-launched markets, citing “macroeconomic headwinds caused by rising inflation, supply chain shortages and the impact of the war in Ukraine.” By July, Clearco was making significant staff cuts and “considering strategic options for [its] international operations.” Sources told BetaKit at the time that Clearco had quietly made more layoffs than the company had announced.
“This has been the hardest three months of our last seven years,” Romanow told the Globe and Mail at the time, which also reported that Clearco had begun quietly increasing the repayment fee for its loans. “It’s my job as an operator to brace for the worst.”
Just one month later, Clearco announced it had scaled back its international presence to focus on the North American market, handing off its overseas business to United Kingdom-based revenue-financing firm Outfund. Previously holding operations in the United Kingdom, Ireland, Germany, and Australia, the move came with additional layoffs, affecting 16 percent of the company’s workforce at the time (60 employees).
Since then, Clearco has hired American FinTech investment bank Financial Technology Partners to explore strategic options, including the possible sale of the company or fresh financing. Additional financing came in October, with Clearco securing $17.1 million USD, including a combined $6 million USD from Romanow and D’Souza. SEDAR filings reviewed by BetaKit show that Clearco secured an additional $8.3 million USD just prior to the end of the year, with the company confirming to BetaKit that the financing came from existing investors.
Both The Globe and Mail and The Information also published news of Clearco’s CEO change and impending layoffs Sunday night.
With files from Josh Scott.
Feature image courtesy Flickr.
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