How Michele Romanow is equalizing access to funding with Clearco — a global leader in the venture capital industry.

By Karen van Kampen

 

For 15 years, Michele Romanow has disrupted industries with her innovative business ideas. At 28, the serial entrepreneur became the youngest Dragon on Dragons’ Den. By 35, she had been named to Fortune’s 40 Under 40 list, and had six business launches under her belt. Her latest venture, Clearco (formerly Clearbanc), has been shaking up the venture capital industry with its revenue sharing model since 2015. The tech unicorn is the world’s largest e-commerce investor, with a valuation over $2.5 billion. 

“If you want to change something in this world, the best way of doing that is becoming an entrepreneur,” says Michele.

As Co-founder and CEO of Clearco, Michele was the 2021 winner of the Innovation Award, a category of the RBC Canadian Women Entrepreneur Awards that honours a forward-thinking entrepreneur who has demonstrated outstanding leadership within her company and industry while setting standards for originality, quality, and successful management.  

Michele has been leading change since launching her first venture in 2006 as an engineering student at Queen’s University. Curious about sustainability in business, she decided to take a high margin product like coffee and see if she could remove all of the waste. Michele used giant composters with red wiggler worms — that eat 10 times their body mass every day — and sold the soil from the coffee grounds to local farmers. Everything was biodegradable or compostable. The Tea Room was North America’s first zero-consumer-waste café. 

“Running a small business and running a big business are really not that much different.”

It was an amazing learning experience — from building the café, to hiring, managing, and motivating 80 student employees, and responding quickly to crises. “Running a small business and running a big business are really not that much different,” says Michele. 

In spring 2008, Michele had just graduated from her MBA when she discovered the worldwide supply of caviar was down by 95%. With approximately $100,000 in winnings from business plan competitions, Michele and her business partners, Anatoliy Melnichuk and Ryan Marien, launched Evandale Caviar. They drove to Canada’s East Coast and built a fishery from scratch, “which is everything it sounds like,” says Michele. “Boats, Fisherman. My hands knee-deep in fish.” 

Then in the fall of 2008, the recession hit. “I’m 21 years old and I’m selling the world’s most unnecessary luxury product,” she says. Michele took a job for a year as director of strategy for a large retailer. Then in 2011, Michele co-founded the e-commerce platform Buytopia.ca. Two years later, she co-founded Snapsaves, an app that she sold to Groupon in 2014. It was her first big break as an entrepreneur. 

In 2015, Michele became the youngest judge on Dragons’ Den, bringing a unique perspective on potential investments. “I am the closest to the picture, because I am still starting and building businesses,” she says.  

Michele began to question why founders were using equity, the most expensive capital, to fund ads and inventory, which had a fixed return. It sparked an idea: Instead of taking 10% of the company, she suggested 10% of revenue until her capital was paid back, plus 6%. “We invented the category of revenue sharing,” says Michele, which disrupted the venture capital industry. 

This became the first Clearco deal. Today, Clearco has invested $3.2 billion in more than 7,000 different founders in 10 countries around the world. 

Michele understands how difficult it is for founders to secure capital. For the first 10 years, she says no one would fund her. With the Clearco 20-minute Term Sheet, no personal guarantee is required — the numbers speak for themselves. Rather than going through the lengthy fundraising process, founders are provided a term sheet within minutes that sets out the amount and terms of capital. 

“The narrative has always been women don’t build enough companies or their companies are not successful. What we’re showing is if more than half our portfolio is women, they are out there and they are building great businesses.”

The process eliminates bias in the venture capital decision-making process. “We are just using data to make our decisions. We don’t hear your pitch. We don’t know what gender you are,” says Michele. “As a result, our portfolio looks so much different than the conventional VC portfolio.” 

A third of Clearco founders are BIPOC, and a large percentage of its founders do not have a post-secondary education. “We really believe that if you have data and a great business, then you should have democratized access to capital,” says Michele. 

Clearco backs 25 times more women than the VC industry average. “The narrative has always been women don’t build enough companies or their companies are not successful,” says Michele. “What we’re showing is if more than half our portfolio is women, they are out there and they are building great businesses.” In 2017, Michele co-founded the Canadian Entrepreneurship Initiative — with Sir Richard Branson as the entrepreneur-in-residence — which encourages and supports women entrepreneurs.  

In addition to founder-friendly capital, Clearco provides business-building tools and resources to help companies grow. This includes ClearX, that introduces founders to potential buyers. Clearco has sold 12 of their founders’ companies within their portfolio.

Michele’s passion for entrepreneurship is also passed on to Clearco employees — approximately 20 companies have been launched by former staffers. “We call our onboarding school Founder School,” says Michele. “We believe that when you come to Clearco, you should learn everything it takes to be a founder. Our mission is to help founders win.” 

Michele’s best advice for aspiring entrepreneurs? “Start now. It’s never going to feel like you’re perfectly ready,” she says, comparing launching a business to jumping into a swimming pool. “You know you’re going to jump in that water, and it’s going to be cold. And you have to jump. You have to be cold, because as soon as you start swimming, you figure out how to do it.”