Clearco Part 2: The Queen's gambit

A pawn must be sacrificed!
OPM 5 min read

I thought the way this story came about was worth telling. By last Sunday, I had an advanced draft that included a few developments about Clearco, which I forwarded to the company for comment at 6:40 PM. On Monday morning, around 10 AM, I became a little antsy that Clearco would ignore me and instead work with a pre-existing media relationship. In fact, this pattern had occurred before, where The Logic’s Jon Victor would break a story, and Michele Romanow would very quickly deliver a rebuttal via The Globe’s Sean Silcoff.

By 10:30 AM on Monday, I decided to publish the first portion of the story that revealed Clearco had quietly raised money, including from the founders. I kept the rest of the story on standby. Doing this would secure the scoop and let the company know I was serious. I concede this was a bit like a terrorist shooting a first hostage - a bit rash. About 45 minutes after I sent the story, Clearco’s global head of communications reached out:

“I saw you just published a piece that is blatantly false and inaccurate. You sent this at 7PM and published at 10AM.”

You can see they can react fast when they want - in 45 minutes! He asked me when I planned to publish the second part. And I said by Tuesday. I also asked what about the published piece was inaccurate. Nick replied:

“The information you published and sent me is either conjecture or just materially incorrect… The article is slanderous and I'm happy to show that point by point with our legal counsel if that's helpful.”

I replied I was available anytime. I did not view the involvement of a lawyer as a threat. Corporates are generally quick to lawyer up - in this case, probably to advise and take notes. Judges love contemporaneous notes. Which reminds me, note to self: I’m a bona fide journalist, deserving of every legal protection available to them. The PR person then changed his approach completely:

“I actually wanted to see if you'd be interested in getting some time to speak to Michele directly one on one to discuss the content of your email. It would allow her to be candid with you and ensure your piece is accurate.​Let me know your availability, Michele has a crazy schedule this week but we could look to set something up for the end of the week or early next week. Would that work for you?​I know you said you wanted to run your piece in the next two days so just making sure that timing works for you.”

This was nothing but a stalling tactic: rather than address the inaccuracies, they dangle the possibility of an interview with a CBC Dragons’ Den star. Rest assured, your boy behaved with dignity. I replied as follows:

“Thanks for the offer, how about we try to do what we can and see if there are things only she can illuminate?

Your "point-by-point" offer sounded pretty good.

I'll fairly consider anything Clearco has to say whether it's the press team or Masa Son himself!”

For those unfamiliar, Masa Son is the Big Kahuna head of Softbank. But the PR person insisted on a call with Michele, and we agreed on Thursday at 5 PM. Predictably, Sean at The Globe had a piece out by Tuesday. But what I didn’t anticipate was that he would get some extra scoops, namely the appointment of a new CFO and the potential for follow-on financing. My draft, as sent to Clearco, raised the issue of the sub-optimal interim CFO situation. Ironically, that draft also had a few lines that took gentle jabs at Sean being Michele’s preferred journalist.

You can see that Sean’s piece had several quotes from Michele. That may explain why she had a “crazy schedule” and could only talk to me on Thursday! Not that I feel entitled to talk to her at a moment’s notice - if ever. Sean credited OPM Wire for the initial report, which was kind of him. I have to say that given all the appropriately skeptical things Sean brings up in his article, the notion I had that Sean is a confidante of Michele is on shaky ground!

On Wednesday, I wondered if Michele would still take the time to talk to me since her gambit had already worked. She did! She was helpful. She started by asking a lot of questions, which is what I would also do in any adverse situation. One thing I did get wrong is that Pranit Tukrel was recruited from Inovia, rather than parachuted in. Overall, I feel we all won. I got to speak to a Dragon without humiliating myself on national TV pitching a newfangled garden hose or whatever goes on at that show. For what it’s worth, I believe she’s very talented, but it’s clear that the finest talent of a generation has been swept up in a gigantic creative destruction experiment with outcomes that will show high dispersion. OMG, I’m such a suck-up. This episode reminds me of the recurring Late Show skit, Alan Kalter’s Celebrity Interview:

​The remainder of this update is primarily of interest to close observers of Clearco. Eminent tech reporter Sean Silcoff’s article is also useful. To the extent I provoked it, I take full credit for all the details therein.

The management situation

In April 2020, Clearco recruited a high-caliber CFO, Curt Sigfstead. He is the former Head of West Coast technology investment banking for JP Morgan. He left Clearco in December 2021 for Clio, a legal-tech startup. With under two years as a Clearco executive, Curt had a relatively short tenure there when held up against his career at JP Morgan, which lasted approximately 23 years.

The whole context behind Curt’s departure is unclear to me. Approximately eight months before Curt’s departure, Michele Romanow announced on BNN Bloomberg that a move to the public markets was on the horizon for Clearco. Given Curt’s experience in capital raising, he could have helped Clearco achieve a successful IPO.

Ivan Gritsiniak served as the interim CFO after Curt’s departure. With a BMath earned in 2016 and starting at Clearco the same year, Ivan has served multiple roles in the company, including as a corporate officer for the parent company and a corporate director in various Clearco subsidiaries. As Michele and Andrew are currently Barbados residents, Ivan is one of the most senior employees that reside in Canada. He seems to have planted some real roots too. Ivan Gritsiniak and Gritsiniak ABC Corp. have purchased around ~$4.4 million worth of GTA real estate in April and May of this year, including a ~$1.4 million condo in downtown Toronto and a ~$3.0 million multiplex in Etobicoke.

The new Chicago-based CFO, Vasili Gerogiannis, is not as high-profile as Curt. His former employer, OppFi, is also a fintech and is down about 75% since combining with a SPAC last year.

Like many VC-funded entrepreneurs, Michele's resume is relatively thin in relation to a largely traditional industry like finance. I say this with respect; relative to her age, she has accomplished much, even before Clearco. However, Michele’s strength, in my opinion, is more in media and hypergrowth than copulas and credit models.

The funding situation

According to Clearco’s previous announcements, the company depends on funding for its receivables from various sources, including Arcadia Funds, CoVenture, Credigy, and Pollen Street Capital.

Upper 90 is said to previously have had a funding relationship with Clearco. However, Upper 90 have since moved on, with all of their principal and returns intact. Apparently, they outgrew each other.

Records, as revealed by The Logic, show that Clearco also has an existing debt relationship with Silicon Valley Bank.

From Shopify’s disclosure, it appears the EDC, owned by the Government of Canada, provides credit insurance on merchant cash advances. Given the EDC’s public nature, I’d be curious to see if the EDC would reveal a record of any insurance claims and premiums that relate to Clearco’s advances.

Per a cursory search on LinkedIn, there has been some employee turnover as of late in Clearco’s capital markets team. Matt Armstrong was a VP of Finance at Clearco for only four months.

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