Michele Romanow is stepping down as CEO of the financier and will become co-executive chair.Bruno de Carvalho/Reuters
Michele Romanow is stepping down as CEO of Clearco, as the e-commerce financier prepares to slash its work force for the third time in six months.
Clearco, officially known as CFT Clear Finance Technology Corp., is set to lay off 50 employees, roughly 25 per cent of its work force, on Monday, bringing its ranks to 140 people, a source familiar with the situation told The Globe and Mail. It had 500 employees last July.
The source also said the company is naming U.S. finance industry executive Andrew Curtis as CEO. He has served as an adviser to Clearco for the past six months. Mr. Curtis takes over for the star of TV’s Dragons’ Den and serial entrepreneur, who made the decision to leave the post 11 months after she replaced co-founder Andrew D’Souza as CEO. She will become co-executive chair along with Mr. D’Souza.
The Globe and Mail is not identifying the source as they are not authorized to publicly discuss the matter.
Mr. Curtis worked on mergers and acquisitions with Merrill Lynch & Co and Lazard Frères, as a portfolio manager with hedge fund Sandelman and was head of credit with private equity company Z Capital Group.
The moves follow a wrenching year for the tech sector in which formerly high-flying, heavily financed tech companies ditched the “growth-at-all-costs” mentality that prevailed in 2021 in favour of cost-cutting efforts to achieve profitability.
Clearco was one of a slew of Canadian tech companies to reach “unicorn” status in 2021 by achieving an on-paper valuation in excess of US$1-billion in the first of two major financings by the company that year, the latter led by Japanese giant Softbank Group Corp.’s Vision 2 Fund.
Clearco has been in a state of upheaval since early 2022, starting with a slew of senior departures. Last July, Clearco, which provides cash advances to e-commerce merchants, stopped originations for advances for a week to increase pricing and tighten up underwriting given the deteriorating economic and credit environment. It also laid off 125 people, one-quarter of its ranks. In August, Clearco retreated from markets other than Canada and the US and shed more staff.
The company hired U.S. fintech investment bank Financial Technology Partners to explore strategic options. It raised US$60-million last year and is now raising US$30-million more.
Clearco launched in 2015, marketing itself as a provider of friendly funding for e-commerce merchants, cheaper than venture capital and less onerous than loans requiring personal guarantees. Clearco offered advances mainly to pay for marketing on digital channels. In return, it received a daily cut of its clients’ revenues until the advance plus an additional fee were repaid.
Most of its advances came from off-balance-sheet facilities backed by alternative or specialty asset managers. Prospective customers didn’t have to provide personal guarantees, give up equity or submit to credit checks, but did have to give Clearco access to their business accounts. Clearco assessed the economics of the business and made automated financing offers within hours.
Last fall, Clearco simplified, and increasingly automated its product; it now finances specific expenditures based on uploaded invoices by customers, who commit to fixed repayment periods.
A Clearco spokeswoman declined comment.
Online technology publication The Information first reported news of the impending layoffs and CEO change Sunday night.