Clearco’s Original Venture Backers Purchase $60 Million SVB Loan

The original venture backers of Canadian eCommerce lender Clearco are reportedly buying a loan made to the company by Silicon Valley Bank (SVB).

Inovia Capital and Founders Circle Capital, joined by the still operating venture capital arm of SVB, are buying SVB’s $60 million loan to Clearco, Bloomberg reported Friday (Aug. 4), citing unnamed sources.

SVB Canada had originally loaned Clearco $80 million in February 2022, according to the report. Clearco was SVB Canada’s largest debtor at the time among more than 200 firms, primarily in the technology, life sciences and clean technology industries.

Clearco’s original backers stepped in to purchase the $60 million loan from Canada’s financial regulator, which has been working to wind down the failed bank’s Canadian operations since mid-March, the report said.

Clearco was founded to provide a revenue-based financing model for online businesses, the company’s co-founder, Andrew D’Souza, told PYMNTS in an interview posted in May 2021.

This form is financing allows small to medium-sized business (SMB) entrepreneurs to get financing to grow their business without suffering the drawbacks of other sources of capital, D’Souza said at the time.

“Equity may be the right choice for a company investing in R&D, but for the vast majority of small businesses in need of funding for everyday spend, having to pitch their company to investors and give up a stake and control in their firms is not the best move,” D’Souza said.

For its solution, Clearco took a page from the brick-and-mortar business merchant cash advance book, a financing tool that advances funds to a business based on future sales as determined by credit card receipts.

Beyond that, Clearco provides funding for “repeatable, low risk activities” such as inventory purchases or advertising spend for online sellers who can demonstrate a strategy to “find the next customer” and not only serve the ones they have, D’Souza said at the time.

In other recent news involving Silicon Valley Bank, the bank acquired this spring by First Citizens has reportedly reentered the startup/venture lending business. It has done so carefully after First Citizens purchased SVB in March after the bank collapsed and was taken over by regulators.