Michele Romanow is stepping down as CEO of Clearc, the financier is cutting jobs again

Michele Romanow is stepping down as CEO of Clearc and will become co-executive chairman.STEVE JENNINGS/AFP/Getty Images

Celebrity entrepreneur Michele Romanow has stepped down as CEO of Clearco as the e-commerce financier cuts its workforce for the third time in six months.

Clearco, formally known as CFT Clear Finance Technology Corp., told employees Monday it was laying off 50 people — 26 percent of its staff — bringing its workforce to 140. It had 500 employees last July.

“We hired too fast last year,” Ms. Romanow said in an interview. “We were growing into too many markets, trying to build too many products.” Cuts affect all areas and levels of Clearc.

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

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

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

The company “has gone through significant growth issues over the past year, but we are incredibly confident that Clearco’s future is bright with Andrew Curtis as CEO,” Clearco CEO Santi Subotovsky, general partner of investor Emergence, said in a statement.

Mr. Curtis, 52, worked on mergers and acquisitions with Merrill Lynch & Co and Lazard Frères early in his career, then worked as a portfolio manager at hedge fund Sandelman and was head of credit at private equity firm 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,” Mr Curtis said. “You have a fundamentally strong company with an attractive outlook, but one that is going through some growing pains and is facing a different macroeconomic environment than what we are all used to. You look at situations like this as dislocating and disruptive, but also as providing extraordinary opportunities.”

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

Clearco is the latest company, following Vancouver-based Thinkific Labs last week, to make multiple staff cuts to accelerate its progress toward break-even performance, leaving behind the former “growth at all costs” mentality that dominated the industry in 2021. That year Clearco achieved unicorn status by achieving a paper valuation of more than $1 billion in a $215 million round of funding 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 series of departures from senior players. Last July, Clearco, which provides cash advances to e-commerce merchants, halted advance payments for a week to raise prices and tighten collateral amid a worsening economic and credit environment. It also laid off 125 people, one quarter of its ranks. In August, Clearco pulled out of markets other than Canada and the US and laid off more staff.

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

Clearco launched in 2015, marketing itself as a provider of friendly financing for e-commerce merchants, cheaper than venture capital and less onerous than loans that require personal guarantees. Clearco offered advances mainly to pay for marketing on digital channels. In return, he received a daily cut of his clients’ income until the advance and additional fees were repaid.

Most of its advances came from off-balance sheet deals backed by alternative or dedicated asset managers. Prospective buyers did not have to provide personal guarantees, give up equity or undergo a credit check, but they did have to give Clearc access to their business accounts. Clearco assessed business economics and made automated financing offers within hours.

Last fall, Clearco simplified and increasingly automated its product; now finances certain expenditures based on uploaded invoices from customers, who commit to fixed repayment periods. “This is a one-time loan extension under the buy-now-pay-later product,” Mr Curtis said.

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

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