Okay. Michelle, Welcome to fortune's most powerful women. Thank you. I like your shoes. So, They're kicking **** shoes. They're kicking **** shoes. Oh my gosh. I want to get your backstory because you have actually. Entrepreneurial roots in Canada. So tell us where you grew up and what your family was like that led you to this place you are at today? Yeah, I mean, it's a great. It's a great question. I grew up in Calgary and so you know, had parents in the resource industry and so felt like I grew up in a really entrepreneurial place. My parents told me I could study anything. I wanted to, as long as it's Started with engineering. So I had a lot of choices. And that ended up serving me incredibly well. I did an MBA right after. And by the time I had graduated, figured out that worldwide supply of caviar of all products was down by 95 %. Because we had overfished the Caspian Sea so it's crazy enough to say no to all of my job offers Move out to the east coast and build a fishery from scratch. This is everything it sounds like boats, fishermen, my hands knee deep and fish like the whole nine yards. And our thesis was cracked chefs couldn't find the product so we had no problem selling the product. The problem was we went into the biggest recession of the last 70 years the year after I started the business. So I'm 21 years old, selling the world's most powerful as luxury. Free product and quickly figuring out and probably not gonna make it. And I think having early failure at the beginning of your career is is just so important. You just have this incredible realization the world owes you absolutely nothing. And so from there I ended up getting to take a job as the director of strategy from a big retailer I saw commerce blow up, and started a commerce company. The big retailer was Sears. Yeah. [ LAUGH ] [ LAUGH ] That's correct, and I'll always be grateful for that opportunity, because I got To, I mean, they gave me as a 22 year old I was a director. They gave me so much [ LAUGH ]- [ CROSSTALK ] In the commerce area? Yeah, and so I got to leave, start my own e- commerce company. We were self funded for five years. I couldn't raise any money. I had figured out how to grow Just by low cost customer acquisition, which then became a huge theme in the rest of my career. That story ended up pretty well. We just kept going. At one point we had six competitors That had raised more than $ 10 million ahead of us And that company was called By Topia And is that the company you sold to Groupon? No, that was that was a little bit later. So anyway, we figured out this Too many to count. We figured out you know, this This E- commerce, if we could attract customers for a low enough cost we could keep growing, and then started an app called SnapSaves that digitized coupons for the CPG space, that company got sold to Groupon and after that was asked to join the cast of Dragon's Den. So I'm on the show- And that was five years ago? It was five years ago. Okay. Five years ago And how many of you, I mean I know we don't have a lot of Canadians in the audience. How many people watch Dragons Den? Wow. A lot. I know, I said to Michelle backstage I said now well the Canadian women know you was this a really popular show. It is a very popular show. I think it is popular because. Everyone has a dream and there's this natural tension between investors that have money and people that have dreams. The show has really shown that and it's shown it in seven minutes segments of these different businesses. It circles back really nicely because I'm on the show, one of the things that most people don't know about is that we film 250 pitches in 17 days back to back. So I sit in my chair and I see ten pitches a day. And a lot of things start to clarify when you see ten pitches a day. And what I kept seeing was all of these e- commerce entrepreneurs are coming on the show. And I just remember these guys, they had made those wooden iPhone cases. And they're like a father- son team, this is so memorable for me. They had done $ 1 million in sales, which is pretty good for entrepreneurs on the show. And they were like look, we have great unit economics. We make each case for ten bucks. You know cost us ten dollars and Facebook ads banners and we sell them for 50 bucks and we're here on the show looking for a $ 100, 000 for 20 % of our company. And I just remember sitting back thinking. This was a bad deal for both of us. This company isn't gonna sell to Apple at a ten times multiple. [ LAUGH ] These guys really need the money, and they're gonna be really resentful when I own 20 or 25 % of their company. And if they take $ 100, 000 and invest it into Facebook ads, they're gonna make $ 400, 000 in sales, that's pretty good for them. And so this is four years ago on the show. I was like, okay guys, we're throwing out a different deal type. I'll give you the hundred thousand dollars. I'm not going to take any equity in your company. I want 5 % of your revenue until you pay me back $ 106, 000. So I'll try to- You said this on the air? On the air Wow. And really not thinking anything of it. Just kind of brainstorming what these guys needed. And I said, this isn't alone, there's no personal guarantees, there's no fixed payment timelines, there's no compounding interest, it's like, you use my capital to grow, I get paid back a little bit faster, I'm happy. And if your business slows down or waited out for the journey. And even the entrepreneurs were like, thrilled. It's the only thing I wanted to see. Was there Facebook ads? Because I knew I'd looked at so many Facebook campaigns for e- commerce companies, I would know if they had a really good return on their ad spend. And so that became kind of, effectively, what was the first clear bank deal. And I never would have guessed that would have become so big. So here, Michelle joins Dragon's Den five years ago. Yeah. There's this moment and you're thinking you okay so the cameras go off and you make you you fund this company this wouldn't iphone today's Yeah Father and son team and you think to yourself immediately or later wow maybe i should start an alternative Startup funding company and call it Clear Bank. [ LAUGH ] You know it takes two years of hop, skip, and jump. Okay. To actually get to the right place and seeing [ UNKNOWN ] But how did you get from there to Clear Bank, this company that by the end of 2019 will have Funded to the tune of a billion dollars, 2000 companies. How do you get from there to here? A lot of things not working. [ COUGH ] That's the first thing so so when we started clear bank, we kind of could see that like, you know the future of work was changing. We started a couple different products. We had done this one. You know experiment and I think what struck a chord is that 40 % of all VC dollars today go into companies that are spent directly on Google and Facebook. That means that entrepreneurs are. They're spending the most expensive capital to do something that by definition should be repeatable and scalable. Like that's what the magic of these digital platforms were, you knew if you injected $ 1, you can get $ 4 in sales out. And so if we can just give entrepreneurs a cheaper way to fund that and a faster way to fund that, we created something called the 20 minute term sheet. I thought it was a cute name because typically it takes you You know, six to eight weeks on the road to get a single term sheet so in 20 minutes we can tell you we can give you this much capital and on these terms. At least you had another option in your back pocket. And how does the 20 minute term- sheet work and how does it, possibly, Provide adequate screening for companies. Really good question. So, what typically happened in the Old World was, a bank would look at a company that was small, and they would say, Well we have no idea if you are going to pay our money back. So, we'll take a personal guarantee, what we can go after your personal assets if you don't pay us. It was the catch all, for basically not having You know, data that was easy enough to understand or that was in an automated stream that AI could look at. And the other option was going to equity investors and you'd have really smart Stanford MBAs, you know, spend four weeks looking at your, Your company in determining if this is good enough. And so what we saw is that there are all these different data sources today. You can automatically connect to bank accounts, to payment processors like stripe to the Facebook ad account. To your e- commerce account. And was all of that data, we could build automation. So clear bank, there actually isn't anyone that looks at individual companies. It's all AI and automation that we've built to be able to do this really quickly. And we're looking at data that's far more accurate. It's system of record. So people can't lie when they give us their data they have to connect their real accounts. And we can see what their return on ad spend is and what their unit economics are, which are far more indicative of if a company is going to be successful than if not. And it takes out the gender bias. It takes out the gender bias. The other nice part about looking at data is that you get rid of your bias. And so we funded eight times more women. And I mean this very sincerely not by doing anything at the top of the funnel. And how what is this gender split between these two thousand companies that you have funded. Now I realize men tend to start more company. Well no actually no that's not true is it women start more companies. Yes. So anyway basic question what's the gender split? So, at Genesis we funded eight times more women than the venture capital, Right. average, so it's typically, the venture capital industry average is about 2 %. So we're anywhere between 16 and 20 %. I see. Okay, who has a question? Yeah, Can you turn up the lights. I can't see back here. Okay. Yes. K Brechin, I'm curious haven't you raised the billion dollars that you actually funded the companies with? I got 450 noes. [ LAUGH ] That was the first part. Everyone on Wall Street thought I was completely crazy because they told me that I think the line was, I don't think you understand, miss, this is not how you lend to small businesses. And I was almost certain that using real A system of record data would be far more predictive because I had run one of these companies. And far more accurate than what historically have been done which is looking at personal credit score and adding personal guarantees. But it took us a long time. Our first funders were actually Founders like us who had determined who had seen the problem themselves or second fund was anchored by Jason Finger who had started seamless and sold it to grub hub and deeply understood the problem that we were doing and then eventually as soon as you build up enough data you can start going to larger and larger credit institutions but it took a long time. And I have an enormous amount of respect for kind of our early credit backers, because that was not easy. And you just raised a new but what 250 million for a new fund? For a new fund. Yeah. And will that fund be any different in its mission and intention from what you've been doing? No, it's the same thing. We just want to expand. We want to expand some right now. We service e commerce businesses. We want to, Expand into different verticals. We wanna expand into different geographies. So this year, we're in Canada in the US have launched the UK and are looking at other places. Because if we think it's hard for founders in Canada and the US to get capital. To grow their business, it's even harder in international markets where the venture capital system is way less developed. And the banks are even more conservative. And I think that that you can do a lot when you empower every founder at every level depending on what they're building. Yes, any other questions. There is one over here. Over here, yeah. Hi, my name is Kumi Somaskandan, I'm with RPC. My question for you is, back to your roots. Where did you go for your engineering degree? I went to Queens And my you know by second year I had figured out that I was going to be much better at building businesses and building Bridges. And so I started this little sustainable coffee shop on campus called The Tea Room. [ LAUGH ]. And it's still there 11 years later and I credit the university for a for giving me that ability to be entrepreneur. In kinda the early days. People ask me all the time like, well, why were you successful? I'm like, I just failed more, I started earlier. [ LAUGH ] Cuz when you're 21, it's a lot easier to fail that being 31. How do you encourage young women and men to do what you did? Because to start at that age, Is do you think you need to have capital or you need your husband backing you. How do you do that? Yeah I think you got to remind young people today that it's easy to become an entrepreneur than it's ever been in the entire course of history. I mean I always think of us like pets dot com example you probably covered them in the early days. Well I just Carolyn Everson who is one of the most senior. Executives at Facebook was part of that founding team she recovered from that. And it wasn't it was that it was a million dollars and servers. It was a million dollars to build that website. And the $ 2 million, like get going, I mean, that entire process today cost you 100 bucks. You can get started with an online e commerce account, you can get going with AWS And even better you can do a kickstarter and see if people actually want your product before you have to make any of it and so I say this on Dragons Den all the time. I'm like it literally costs you [ LAUGH ] almost nothing to figure out if you have a good idea today. And be global instantly. And be global instantly and so that should really reduce the risks of young people starting and seeing If they can figure this out because the more founders we can create the more global problems I think we can solve. I mean I personally look at you know the trillions of dollars that governments have invested in climate change. And the biggest difference that has been made in the US is the Nest thermostat and the entrepreneur that built cars and trucks people want to drive, and so if we want to look at at real solutions for the future, I think that all comes in in backing entrepreneurs and I think that's that's part of my own personal mission and the ClearBank mission. [ BLANK_AUDIO ] That is an inspiring note to end on. Thank you, Michelle. Thank you so much for being here. [ BLANK_AUDIO ]

‘Dragon’s Den’ Alum Michele Romanow: How I Made it

The co-founder and president of Clearbanc joins Fortune’s MPW International Summit.
