Michele Romanow steps down as Clearco CEO, financier cuts another 25 percent of staff

Celebrated businesswoman Michele Romanow will step down as CEO of Clearco as the e-commerce financier cuts its workforce for the third time in six months.

Clearco, officially known as CFT Clear Finance Technology Corp., told employees Monday it would lay off 50 people, 26 percent of the staff, bringing its ranks to 140 people. It had 500 employees last July.

“We hired too fast last year,” Romanow said in an interview. “We grew up in too many markets, we were trying to build too many products.” The cuts affect all areas and levels of Clearco.

The company also named US financial industry executive Andrew Curtis as chief executive officer, six months after he took an advisory role at Clearco and was involved in key strategic decisions, including the hiring of chief financial officer Vasili Gerogiannis.

Mrs. Romanow, a TV star the dragon’s lair, said the decision to step down was his own, 11 months after he replaced co-founder Andrew D’Souza as chief executive. “I told the board, ‘I think it’s time we had someone who knows and has operated in these economic conditions and has a lot of experience in finance and capital markets so we don’t make mistakes there.’ Mr. Curtis “built my confidence; it was very clear that we needed someone like him. We have 100 percent the right person.”

She and Mr. D’Souza will serve as co-CEOs and Ms. Romanow said she would continue to work on fundraising, strategy and connecting with partners and clients.

The company “has been through significant growing pains over the past year, but we are incredibly confident that Clearco’s future is bright with Andrew Curtis as chief executive officer,” Clearco director Santi Subotovsky, general partner of the company, said in a statement. Emergency inverter.

Mr. Curtis, 52, worked in mergers and acquisitions with Merrill Lynch & Co and Lazard Frères early in his career, later serving as a portfolio manager at the hedge fund Sandelman and chief credit officer at the private equity Z Capital Group. Before joining Clearco, he was an advisor to Annaly Capital Management, a real estate investment trust.

“I’ve been in a lot of situations like the one Clearco is facing,” Curtis said. “You have a fundamentally strong business with attractive prospects, but one that is going through some growing pains and facing a different macroeconomic environment than we are all used to. You see situations like this as disruptive and disturbing, but also as extraordinary opportunities.”

The moves follow a harrowing year for the technology sector and put Clearco in position to reach profitability in 2023, Romanow said.

Clearco is the latest company, after Vancouver’s Thinkific Labs last week, to enact multiple staff cuts to accelerate its drive towards break-even performance, leaving behind the previous “growth at all costs” mentality that prevailed in the industry. in 2021. That year, Clearco achieved “unicorn” status by achieving a paper valuation of more than US$1 billion in a US$215 million financing led by the Vision 2 Fund of Japanese giant Softbank Group Corp.

Clearco has been in a state of turmoil since early 2022, beginning with a large number of senior citizen departures. Last July, Clearco, which provides cash advances to e-commerce merchants, halted advance origination for a week to raise prices and tighten underwriting given the deteriorating credit and economic environment. It also laid off 125 people, a quarter of its ranks. In August, Clearco withdrew from markets other than Canada and the US and laid off more staff.

The company has retained US fintech investment bank Financial Technology Partners to explore strategic options, a process that is ongoing. It raised $60 million last year and is now raising $30 million more.

Clearco launched in 2015, marketing itself as an e-commerce merchant-friendly financing provider, cheaper than venture capital and less burdensome than loans that require personal collateral. Clearco offered advances primarily to pay for marketing on digital channels. In return, he received a daily share of his clients’ income until the advance was repaid plus an additional fee.

Most of its advances came from off-balance sheet lines backed by specialized or alternative asset managers. Potential customers did not have to provide personal guarantees, waive shares or submit to credit checks, but they did have to give Clearco access to their business accounts. Clearco assessed the economics of the business and made automated financing offers in a matter of hours.

Last fall, Clearco increasingly simplified and automated its product; it now finances specific expenses based on invoices uploaded by clients, who commit to fixed repayment terms. “This is a one-time extension of credit paid on a buy now, pay later product,” Mr. Curtis said.

Ms. Romanow said Clearco’s credit performance has held up and was boosted in the fourth quarter by strong e-commerce sales and customer demand. But she added: “I don’t think anything is easier in this macroeconomic environment. Interest rates will continue to rise. People will continue to buy, but at what price? We are being cautious.”