The Future of E-Commerce Funding: A Conversation with Andrew Curtis

Empowering E-commerce with Non-dilutive Funding: A Conversation with Andrew Curtis, CEO of Clearco In this insightful episode, Andrew Curtis, CEO of Clearco, discusses Clearco’s mission to revolutionize funding for direct-to-consumer e-commerce businesses. Clearco provides non-dilutive capital, allowing entrepreneurs to secure growth funding without giving up equity or providing collateral. Curtis elaborates on how Clearco’s revenue-based finance model works, its impact on the funding landscape, and the importance of discipline and strategic focus in navigating market changes. He also touches upon Clearco’s shift to a new product—invoice funding—and the critical role of transparent communication within the company.

00:00 Introduction to Andrew Curtis and Clearco
00:08 Clearco’s Mission and Non-Dilutive Funding
02:59 Challenges and Innovations in Funding
03:40 Clearco’s Focus on AI and Machine Learning
04:43 Finding the Right Customers
07:18 Clearco’s Recent Challenges and Strategic Shifts
08:56 Vision for Clearco’s Future
11:42 Leadership and Management Insights
15:48 Final Thoughts and Advice

Click here for more information on Future Narrator or for more details about the episode.

Creators & Guests

Host

Dr. Paul Newton

Host

Edwin J. Frondozo

Host & Producer of The Business Leadership Podcast

Producer

Amanda Lee Annis

AC

Guest

Andrew Curtis

Andrew Curtis is the CEO of Clearco. Andrew has over twenty years of experience working in finance in New York City, including roles at investment banks Merrill Lynch & Co. and Lazard Frères as well as several investment managers. Before joining Clearco as an advisor in July 2022, he served as an advisor to Annaly Capital Management, a real estate investment trust focused on housing finance and the residential mortgage market. Andrew has an extensive background in leveraged credit, liability management and financial restructurings, asset-based finance and securitizations. He graduated from Brown University and subsequently earned master’s degrees from the University of Chicago Graduate School of Business and The Fletcher School of Law & Diplomacy at Tufts University.

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[00:00:00] Salli: You're listening to the business leadership podcast with Edwin Frondoso.

[00:00:10] Andrew: What Clearco is doing after rapid growth and expansion is

finding new products when we interact with customers, we have one product today, but sometimes we talk to them and it spurs ideas,

And you're like, oh, wait a second. What if we did this? maybe it has different payback features or a longer tender so they have capital for a longer time.

[00:00:34] Edwin: Good morning. Good afternoon. And good evening biz leader. Welcome to another episode of the business leadership podcast. I'm your host. Edwin Frondozo. And today we are featuring a special episode from our future narrator mini series recorded live at the collision conference in Toronto Canada.

In this podcast mini series, we explore the future of leadership, innovation, and storytelling with visionary leaders who are not just designing products. But our creating entire new worlds and markets.

Joining me is Dr. Paul Newton and together we'll be speaking with Andrew Curtis. He is the CEO of Clearco in our conversation, Andrew, we'll discuss Clearco's pioneering role in providing non-dilutive revenue based financing to e-commerce businesses. We explore how Clearco supports entrepreneurs without requiring them to give up equity. Or provide collateral. It's a very unique approach. That has positioned Clearco as a leader. In the field since 2018.

Andrew we'll also share insights on the company's strategic focus, following a period of rapid expansion and subsequent retraction emphasizing the importance of decisive. Discipline rigor and sustainable growth. We'll delve into the impact of new technologies like AI on the funding industry and Andrew's view. On effective leadership.

Particularly the value of clear, transparent communication with employees during challenging times.

So without further ado, Here we go.

We're now speaking with Andrew Curtis, CEO of Clearco. Andrew, how are you doing today?

[00:02:12] Andrew: I'm great. Thanks for having me.

[00:02:14] Edwin: No, thanks for dropping in Andrew.

I'm just going to jump right in. Can you share what problem is Clearco solving today?

[00:02:20] Andrew: So Clearco was created to fund. Working capital to e commerce businesses. So we provide or advanced capital to direct to consumer e commerce businesses. Typically, these air founders or entrepreneurs who are growing businesses, and we're doing it in a way that is non dilutive, so they don't have to give up equity in order to get this capital.

we created this category. It's revenue based finance. And we did that back in 18. We were the first ones to do it. the brand is extraordinarily powerful and strong, And we pride ourselves and really our North Star Clearco is supporting these entrepreneurs as they're trying to find ways to grow their business and they need capital to do that.

[00:02:59] Edwin: Yeah. You know what the, some of the keywords that, was buzzing in my ear as you explain that, and this is benefit for those who are listening is the non diluted funding. Can you share a bit more of that and how that works?

[00:03:11] Andrew: Of course.

[00:03:11] Edwin: Yeah.

[00:03:11] Andrew: So non dilutive funding is shorthand for saying you don't have to give up ownership or equity in your business.

So I think one of the challenges any small business owner, whether it's a DTC, Ecom or otherwise, is they have a great idea for a product, a service. They need capital to fund the growth of their business. And in order to attract that capital, often someone's asking for a piece of the ownership of the business.

So what was innovative about Clearco was finding a way to avoid that trap. we do that by providing revenue based finance. And not asking for collateral if you're not raising equity capital, you're typically raising debt capital.

often when businesses raise debt capital, the borrowers say, it's a traditional bank. They want a lien in your assets, right? So the business's assets would be lien. Oh, or they want a personal guarantee from the owner or founder. that can be very challenging for someone to get comfortable with.

Our revenue based finance product, doesn't have you giving up equity in your business, and it doesn't have you pledge collateral or agree to a personal guarantee. that's really differentiating for Clearco in this form of financing.

[00:04:17] Edwin: It almost sounds unreal sometimes, I'm sure you and your team might hear.

And it really enables these entrepreneurs to, Scale quickly.

[00:04:27] Andrew: Correct.

[00:04:28] Edwin: Because it's tied to their revenue and that's how it gets tied in with Clearco, correct?

[00:04:32] Andrew: Yeah, absolutely. These customers like they're quite often inhibited mainly by lack of access to capital. So they haven't been in business long enough or traditional bank lender can't move quickly and a lot of our customers they want capital fast.

They want to raise it, deploy it very quickly. And so traditional bank financing markets, they don't work for them. They're not open to them. And so that's why this, like this idea was so revolutionary and remains revolutionary.

[00:05:00] Edwin: We're sitting here in collision. There's a lot of new technology.

AI is the buzz. I'm curious, How are these new technologies, these new innovations impacting the funding?

[00:05:11] Andrew: I think, I was on a panel earlier today called the Venture Winter. And talking about basically the retraction of venture capital firms from investing in startups.

Of course, AI remains very attractive. And so there's lots of investment going into AI. And You'll see that obviously in these markets. One year might be fintech. Next year might be Web three. Now it's a I or climate tech or whatever the case may be. Those just reflect cycles where VCs are deploying their capital for Clearco, A I machine learning based models.

That's always been a part of our business, right? Especially with regard to how we manage risk and extend credit to our customers. So the core piece of what we do Is we need to understand a customer's credit worthiness. Like we'd love to be able to fund every entrepreneur in the world who has a good idea or thinks they have a good idea, but probably not the wisest thing.

We need to make sure that these customers that come to us, that they have the capacity and wherewithal and expertise and running their business so that they can pay us back the capital. And I think that's really been one of the things we've learned over the last couple of years is Clearco's mission is to serve these customers, right?

We love serving our entrepreneurs. We love being the fuel for their growth. But if you don't do it in a sustainable way, then Clearcoma won't last. So the idea of the idea of finding the best kinds of these customers that can take capital and return the capital and then we give it to them again and they keep growing their business, that's really the promised land for us.

[00:06:41] Edwin: Now that, it's really interesting and I'm curious when you are looking for these right customers, how does, how do the founders find out about these opportunities? Because I assume A lot of founders go the traditional routes. And maybe it's part of your mission, and if you want to talk about it, is like getting this more in front of this.

[00:07:02] Andrew: Correct.

[00:07:02] Edwin: There's this opportunity.

[00:07:03] Andrew: Yeah, I think it was it was harder a couple of years ago. Like when Michelle and Andrew started Clearco, they were really very effective at proselytizing. Yeah. For what we were doing, right? And so they were very good at saying listen, this is revolutionary, this is something different.

You don't have to give up your business. business. Now, the market is more crowded now. It's more competitive. And I think that founders, like if they're looking, they can find revenue based finance. It may take them time, right? When they first start, they're like, okay, what are my financing options? I could go raise equity.

I can give up ownership in the business or I'll call my local banker. He's going to say no. And then ultimately like maybe it's a windy path, but at some point they come to revenue based finance for their businesses. And then, again, we started the category, but there are others there now. And we compete with those, our peers to make sure that we're finding the best customers to extend capital to.

[00:07:55] Edwin: And I'm assuming from the customer base that Clearco has now some may be hearing about a word of mouth as well now and the experience that they're having and it's extending that way as well.

[00:08:07] Andrew: Yeah. Word of mouth is critical. For what we do. So we're constantly, when we develop good relationships where we're repeatedly funding customers, we love it when they tell their peers, right?

They tell their other DTC e comm founders, listen, you should speak to Clearco cause the product is simple to understand. It's very fast. It has a lot of utility. We don't hide any of the costs of the product. All of those things are very important to entrepreneurs who are trying to grow their business.

So we love it. We love word of mouth. And we're always looking for ways. To get the word out there about clear.

[00:08:38] Edwin: That's amazing. What does quote working capital in the hands of all e commerce startups and quote mean for the future?

[00:08:47] Andrew: If you can achieve that, it means a lot of entrepreneurs and founders with great ideas, great products, great services, being able to achieve their dreams, right?

So that to us, that's why we get up in the morning is we want to find customers who have great ideas and great businesses, and Who need our capital to really supercharge their growth. So that is really our North star. It's always been our North star from when Michelle and Andrew founded the business years ago to today.

The question is just how do you organize to, to do that?

[00:09:18] Edwin: This being the business leadership podcast, I'm just, we talk about leadership management specifically, I'm curious, what are the biggest challenges you're facing now?

[00:09:28] Andrew: Yeah. So for Clearco. Kind of the second half of 2022 and most of 23 was a period of an extraordinary transition and some challenging times.

We had expanded very aggressively overseas. We started to experience a little bit of stress in our business in mid 22. The founders pivoted the product to a new product, which is, an extraordinary product that's made all the difference for the business called. invoice funding. All of those things, happened in the 2022-2023 timeframe.

We completed a very complicated recapitalization, but now we're back to running the business. So running the business today means we're rescaling it, right? We're going out and we're originating more advances to our customers because in order for clear code to be profitable, we need to have sufficient scale.

For instance, I was asked on the panel today, is profitability and scaling Or revenue growth, are they do they work together or are they counter to one another? And for Clearco, they fit perfectly in order for us to achieve profitability. We need to sell enough units to put it simply.

So we need to make enough advances. So we're covering all of our fixed cost base. And so what we're constantly trying to do is find great customers, make sure they get capital. Make sure that capital comes back to us so that we can extend it again to them or to new customers.

[00:10:51] Edwin: Andrew, what is your vision of the future that Clearco is building today?

[00:10:56] Andrew: Yeah, so what Clearco is doing after a period of like very rapid growth and very rapid expansion and the pursuit of a lot of different business activities and strategic objectives is we have really become focused on one product and one geography. So the product is the invoice funding product and the geography is the United States. So we've retracted from Western European markets. We were doing things in Australia. We've retracted from that. And so today for us it's rigor and it's discipline and it's fact based analysis and running the business so that we can get to profitability.

Now once we get to profitability, what do we want to do? Yeah. We want to find new and interesting ways to serve our customers because In an ideal world, we're expanding our products. We're entering adjacent markets. And what we do really well, we believe is we understand risk really well. And we understand credit really well.

And we have a very powerful risk engine. And when that engine over time, it becomes more and more developed and more and more sophisticated, we believe we can aim that risk engine at other markets. And we can use that risk engine to develop other products. So that's, what's really interesting to us a couple of years out, but today.

One product, one geography, and just a lot of discipline blocking and tackling one foot in front of the other to get to profitability.

[00:12:16] Edwin: Yeah. And what's interesting from the story and the timelines is, creating the category and then retracting that's a very unique story and where we're going and then what happens when you hit that vision of, winning that region again.

Do you see yourself going wide again?

[00:12:34] Andrew: I think, I think what Clearco did sometimes in the old days was they wanted to be a lot of things to a lot of different people. And part of that, again, it relates to some of the questions that I was asked on the panel today. Part of that was just, that was the market we were in, and VCs were making investments and they were expecting very rapid growth. And that growth was sometimes, At all costs. And it was undisciplined. And it wasn't always sensible. Now it's very hard, I think, to criticize founders whether of Clearco or anyone else for pursuing growth at all costs, because they were being rewarded for it.

Rewarded with a lot of VC raises at ever increasing valuations. But today, and this goes to your question about retraction today, they're being rewarded for something different. And you're being rewarded for discipline, efficiency, running your businesses leanly and being highly focused. That is the market we live in today and that's what we're doing.

[00:13:31] Paul: You keep coming back to the North Star that that you're focused on both for your employees and for how you're attracting customers. How did you come to that?

[00:13:40] Andrew: So the I think the North Star as far as serving our customers, it's always been there. That's not my idea, right?

That was Andrew Michelle's idea from day one And I think that they saw this really, Michelle talks about it all the time she saw this really interesting problem where she just saw business owners who had great ideas and were hustling and Trying to make things work Often being put in positions where they had to give up ownership and equity in their business You And I think she and Andrew looked at it and said wait a second.

Maybe there's a different way to get them capital. That's not so punitive where they're not giving up ownership. So that North stars always existed. Now the internal North star, the way I think the way I talk about it with our employees and the way I want all of our employees to think about it is if that's our external North star, right?

That's what we want to do in the market. The best way for clear code to do that is to be disciplined. Because you have to be sustainable. You've got to get to a place where you're profitable if you want to continue to satisfy that North Star of serving these entrepreneurs. If you can't do it in a profitable, sustainable manner, then you're not going to be able to continue to do what you want to do for your customers.

That, to me, is like the big lesson of the last 18 months or two years in this change in markets that we've seen.

[00:14:54] Paul: And then when they saw that missing in the marketplace and decided to fill it in building that category were they evangelizing the category or their product or how did they go?

[00:15:05] Andrew: I think one of the reasons there are new entrants and we have peers today is because they were so effective, right? So they were very. They were, they're, they were very good at doing it. They're still very good at doing it. And it and maybe in some ways it wasn't that hard 'cause it was such a great idea.

And I think people would look at it and be like, oh my God, this is a new way for me to access capital that didn't exist before. And so Michelle, Andrew, they proselytized very effectively. And then of course other people looked at it and said, oh, maybe I should try that too. I can duplicate what Clearco's doing 'cause it's such a great idea.

[00:15:36] Paul: And so then this retracting, is it, are you just harvesting in the category or is there a vision further as to where you go next?

[00:15:44] Andrew: I think as we've come out of the recapitalization, first of all, we never stopped originating advances to our customers, maybe for a month in summer of 2022, but we were originating throughout the recapitalization process.

Now we're just doing it, At greater scale. And yes, to your point, we're going back to customers that maybe they left us for a little while. Now we're re engaging them. And the way we're able to re engage them successfully is it's the product. It's the invoice funding product. People love the product.

They love the clarity of it. They love the speed with which they can access the capital. And that's really what distinguishes us. And so we, of course, we're always building new customer relationships. That's very much a big focus of ours. But we love the fact that we can serve old customers as well.

[00:16:28] Paul: Oh, very cool.

[00:16:29] Andrew: And in this environment, where, people are very much capital constrained, it's more important than ever, right? Rates are high, credits not easy, money's not cheap anymore. Yeah. And so for us to be able there, to be able to say, listen, we're rescaling we're growing our customer base again, it's exciting and our customers need less.

[00:16:50] Paul: Oh, that's a great vision to carry forward and keeping keeping everyone engaged in it. Yeah, of course. Yeah,

[00:16:54] Andrew: it's great. I love the fact that we are rescaling and we're reengaging our old customers and we're finding new customers. And like I said, a year out, we're finding new products because when we interact with our customers, yeah, we have one product today, but sometimes we talk to them and it spurs ideas, right?

And you're like, oh, wait a second. What if we did this? It's maybe it, it has different payback features or maybe it's a longer tender product so that they know they have the capital for a longer period of time. It could be myriad things, but that's what really excites me is, okay, what can we do for our customers in the future that we can't do today?

Because what we do for them today is extremely valuable, but there are other ways to serve them and I'm excited to find those ways.

[00:17:36] Paul: Awesome vision. Thank you.

[00:17:37] Edwin: Andrew, before we let you go, I'd love it. As always we'd like to ask our guests if you have any final thoughts, advice, recommendations to the business leaders, execs, or founders who are listening today.

[00:17:48] Andrew: Yeah, I think that, for me in this current environment I focus on two things, running the business and encouraging our employees to run our business with a lot of discipline and a lot of rigor and a sense of urgency because it is a challenging time for a lot of businesses. It's a challenging time for people in our sector.

It's a challenging time for our customers. And I think the way that you serve these customers successfully is you run your business with a ton of discipline.

The other thing I think I've learned over the last couple of years is communicating to your employees in a clear and transparent and succinct way.

And being very honest with them is what makes the difference. You have to be clear with your employees and you have to be frank with them, especially during periods where markets are disrupted. And if I think back to the recapitalization process last year, I became CEO in January. When I became CEO, we had this recapitalization in front of us.

We were telling employees, we think we can do it by April. We did it in October, right? So what did that mean? That meant every month we would convene the employees and we would tell them where we were in the recapitalization. And so what we were doing was we were being very detailed, like we were giving them lots of facts and we were being extremely clear and transparent with them.

And sometimes the news wasn't particularly optimistic or favorable, but then you brought them along and they're like, okay, we're going to hang in there. The employee is saying, I will hang in there because he's standing up in front of me. He's committed. I can tell he's committed. Other members of management are committed.

I can see that. It's palpable to me. And they're being extremely frank with me. So I know where I stand and I'm going to hang in there and I'm going to support my fellow employees and I'm going to support Clearco and ultimately I'm going to support the customers. Cause again, that's our North star. So those are like two things that I always come back to when I think about the last couple of years at Clearco.

[00:19:39] Edwin: That's amazing. Thank you for joining us on the business leadership.

[00:19:43] Andrew: Yeah, thank you for having me. It's been a blast.

[00:19:45] Edwin: Amazing.

That's it biz leader. Thank you for joining me. On this special episode. Of the business leadership podcast, part of our future narrator mini-series recorded live at the collision conference. This conversation with Andrew was amazing. Exploring Clearco's innovation approach to financing and his insights on sustainable growth and leadership.

For links to all the resources we discussed to connect with Andrew. And to learn more about the future narrator project. Please do slide into the show notes within the app that you're listening to right now.

And by the way, if you are interested in reading more about Andrew. And the other amazing business leaders that we profiled joined the wait list for an upcoming book. And if you found value in this episode, please do subscribe rate and share it with the first person who comes to mind that could benefit. And be grateful from hearing from you, your support. Means everything.

It helps us grow and empowers us. To create more great content. Thank you again for tuning in and being part of the community. Until next time have a 100 X day