A company looking to convince startups to ditch VC funding in favor of taking out a loan just raised $1 billion

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Clearbanc, a company that provides non-dilutive funding to startups as an alternative to VC funding, has closed $1 billion in capital (including the $120 million it disclosed last year).

The company offers startups an alernative to raising funds through a venture capital firm, giving loans with 6% interest that are repaid by taking a portion of the startup's revenue.

Clearbanc, a company that provides non-dilutive funding to startups as an alternative to VC funding, has closed $1 billion in capital ."Today, 40% of VC dollars in companies are spent on Google and Facebook ads," Michele Romanow, co-founder of Clearbanc and an investor, tells Axios."Founders are using the most expensive capital for this."

Instead of buying equity in a startup, Clearbanc simply charges a 6% fee for a loan. The startup shares a percentage of its revenue with Clearbanc until it's paid back. Clearbanc uses data like a company's Stripe transactions and Facebook ad conversions to vet potential investments. It mostly funds e-commerce startups with consistent revenue.

 

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