Clearco challenges the status-quo with unbiased investment opportunities for entrepreneurs.
From about the age of 10, Andrew D’Souza (BASc ’08) began to think of inventive ways to earn money. An early entrepreneur, whose family immigrated to Canada from India, D’Souza started providing services like paper-delivery, lawn mowing and dog walking to his neighbours. Later, he took on part-time jobs to save for university because he wanted to avoid debt. Today, D’Souza is the co-founder and CEO of Clearco, a Toronto-based fintech company that has invested $2.2 billion into 5.5 thousand ecommerce companies.
> Andrew D'Souza (BASc '08)
> Co-founder and CEO, Clearco
When he enrolled in the Systems Design Engineering program at Waterloo, D’Souza imagined a career building and designing cars. A big draw for him to Waterloo was the co-op program because it allowed him to try different work placements alongside his classroom learning. Through his placements, D’Souza was able to narrow in on his career interests. He found he was not inspired by the career trajectory in the automotive industry, and when he completed a co-op term at McKinsey, a management consulting firm, he discovered that he enjoyed developing strategy, but missed the accountability of building a product. D’Souza decided entrepreneurship might be a good fit. Drawn to the tech-startup sphere, he accepted an invitation from Chamath Palihapitiya (BASc ‘99) to work at a startup in Silicon Valley after graduation.
“When choosing a career path, continue to understand what gives you energy and what you find interesting and lean into those things,” D’Souza says. “Ask yourself what is the impact you really want to leave on the world. With entrepreneurship, there are a lot of setbacks, but if you’re doing something because you’re passionate about it, you’ll be a lot more resilient."
An idea takes root
Though D’Souza later became the COO of education startup, TopHat and the president of Nymi, a wearable platform focused on identity and security, it was his time in Silicon Valley that led to the idea behind Clearco.
D’Souza noticed that entrepreneurs in Silicon Valley were advantaged, not because of superior ideas, but because of their location, education and access to investors. He believed there should be a better, more accessible way for startups to get funding. Seeking to level the playing field for entrepreneurs, Clearco has pioneered a funding model that removes biases by using data science. Co-founded in 2015 with Michelle Romanow, a Canadian tech entrepreneur known for her season on the cast of CBC’s Dragon’s Den, Clearco’s mission is to open up opportunities for entrepreneurs who operate online, no matter their journey, location or business solution.
Tech that removes bias
While traditional Venture Capital (VC) funding relies on pitches and networking and retains equity, Clearco uses AI technology to collect data to evaluate a company’s eligibility for investment and does not take ownership or control. Instead, the investment is paid back through a small percentage of the company’s revenue along with a minimum 6 per cent return. Traditional VC models can take many months to make decisions, but Clearco’s algorithm takes less than 20 minutes before it determines whether an investment can be made and how much.
Bias in traditional funding models is common. Crunchbase reported that startups with all-female founders drew just 3.4 per cent of all venture capital dollars in the U.S. in 2019, and that declined to 2.4 per cent in 2020. D’Souza suggests these low numbers may be because many female entrepreneurs are solving problems they face in the world, but in pitch meetings men, who may not relate to their ideas, make up the majority of VCs. Clearco funds eight times more women than traditional VC funding and 30 per cent of their entrepreneurs are People of Colour. They also focus on being accessible to entrepreneurs who may be far from networking opportunities offered in major cities.
“If you only fund entrepreneurs that look a certain way and only invest in certain types of companies, the result is homogeneous companies that benefit a singular group,” says D’Souza. “But if you enable diversity of founders, companies and ideas, the world will look much better, whether it’s improvements to healthcare or sustainability solutions, every entrepreneur has their own vision, but they need support and resources to get off the ground.”
Clearco continues to grow
Earlier this year, Clearco reached unicorn status, a designation for tech startups that achieve valuations of $1 billion US. While the company began by offering more accessible funding for startups, Clearco plans to position itself as a partner for online entrepreneurs, packaging data and providing founders with everything they need to succeed.
A better funding model for startups was originally posted in Waterloo News.