How revenue-based funding is helping innovative startups like PhycoHealth flourish

nutritional and health benefits of seaweed

PhycoHealth founder, Dr Pia Winberg. Source: Supplied.

Based on the South Coast of NSW, PhycoHealth produces food, supplements and beauty products made from seaweed. Its founder, Dr Pia Winberg, a scientist with a focus on marine sustainability. After a decade of research she realised the nutritional and health benefits of seaweed, and began a mission to farm seaweed to help overcome global food and health challenges.

With clinical research increasingly showing the nutritional and health benefits of seaweed, PhycoHealth is enjoying strong growth in demand. The company wanted to ramp up marketing and expand overseas but ran into problems getting funding. Banks didn’t understand the speed with which ecommerce businesses like PhycoHealth needed to scale. Dr Winberg was also reluctant to give up equity in her rapidly expanding business to outside investors.

“It is hard to get finance as traditional lenders can be conservative and they don’t understand how ecommerce is evolving every day,” she notes.

With expansion plans well underway to enter the UK market, Dr Winberg discovered a new form of revenue-based funding with Clearco. Revenue-based funding can be much safer and more flexible than traditional methods. Instead of having to give up equity, businesses secure funding and repay it from future revenues as their business grows.

“With Clearco there was no collateral or dilution of ownership. This is particularly important for early-stage startups with huge growth potential like PhycoHealth,” Dr Winberg says. “Because repayments are proportional to revenue, the interest of the business and the investor are aligned. This also gives us breathing space in slower periods, as repayments are lower.”

Another key advantage with Clearco’s innovative model is that it uses AI technology to strip out human bias, with proprietary algorithms which are gender, race, region, and location agnostic. Female-led startups tend to attract far less funding than male-led startups, and one survey found that 62% of women entrepreneurs reported experiencing some form of gender bias during the funding process. Other minority groups face similar issues.

With Clearco, businesses simply connect their revenue and marketing accounts with Clearco’s API, which then shows them investment offers. These range from $10K to $20 million.

According to Dan Peters, Clearco’s Australian MD, more and more innovative ecommerce companies, from a range of sectors including fashion, beauty, food and health, are discovering the flexibility and agility of revenue-based funding.

“Globally Clearco has invested over USD $3b in over 7000 companies, funding 25 times more women founders than traditional VC. We also give our founders access to a trusted network of agencies, platforms and technology vendors via our Clearco partner network,” Peters says.

Dr Winberg certainly agrees that the wider support Clearco offers has been invaluable in taking PhycoHealth global. “I believe that innovation has a better chance with companies like Clearco which step outside business-as-usual models to facilitate growth. It’s also fantastic to have the Clearco partner network as it demonstrates ways to grow that you may not be previously aware of.”

To find out why more than 500 Australian small businesses have turned to Clearco visit Clearco Australia.

Clearco

Co-founded as Clearbanc in 2015, Clearco offers the most founder-friendly capital solutions for e-commerce and mobile apps founders as well as a full suite of products and access to a powerful global network, insights and data, and recommendations. Clearco has financed over 5500 companies to date. It launched in Australia in October 2020 and has already financed over 500 companies including PhychoHealth apparel label McIntyre Merino, the one stop shop for food goods iPantry, Jolyn, The Beard Market, Vegan Grocery Store and Bhumi.

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