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The firm raised a $50 million Series B, led by with participation from Inovia and Emergence Capital 1, to build out its international presence and hire more data scientists, according to firm founders and .

Next, through limited partners and , Clearbanc has created its third fund, a $250 million fund to invest in new verticals like SaaS.

The duo, which has spoken on how equity investments have stripped ownership from founders, are quick to point out this news isn’t hypocrisy at play. For them, a company with a 10 year horizon, is “exactly what equity [investing] should be used for,” said Romanow. They’re using the capital raised through its equity sale (the Series B) to help with sales, marketing, and experimentation in new geographies, said D’Souza. 

None of the Series B will be used directly toward investing in future companies. “It would be very counter intuitive to use equity dollars to fund other entrepreneurs,” said D’Souza.

So why did it make sense for Clearbanc to sell shares to raise capital, when it trumpets the opposite solution – non-equity financing – for others? It’s because the firm isn’t using the cash the way most founders do, it claims.

Clearbanc said founders make a mistake and sell shares in their company just to turn around and spend 40 percent of those venture capital dollars on Facebook and Google campaigns. In contrast, Clearbanc thinks that equity fundraising is effective when its being used to grow other areas of the business. 

In some ways, Clearbanc raising a Series B is giving in order to get back. The idea here is that the stronger, and more widespread the Clearbanc team is, the more equity-free investments we’ll see. This year so far, the firm has invested in 900 companies. (Crunchbase News asked for a list of investments from the company; it declined to disclose all.)

Regarding the new $250 million fund, the duo was inspired to create this third investment vehicle because they kept meeting founders who weren’t e-commerce focused, but wanted equity-free investment. 

So, Clearbanc started looking at other indicators of a healthy business that are tied to revenue. Like shipping volume, or sales. The company is still figuring out what exact focus the new fund will have, but said that while it previously cut checks between $10,000 and $10 million, it’ll now invest in larger companies, with checks greater than $10 million.

As Clearbanc inches toward 1,000 investments, D’Souza said Clearbanc’s data strategy is helping tear down bias in investment decisions, a rampant problem within venture capital. 

“You get VCs who are looking for pattern recognition for the 22-year-old Stanford dropout, wearing a hoodie that came from the right family, and you’re immediately at a disadvantage,” he said.

And for proof that Clearbanc’s data-driven approach avoids that: to date the firm has funded eight times more female founders than the venture capital industry average.

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To start, let’s take you through the new class of corporate venture capitalists, folks against term sheets, and a firm that offers VC-as-a service.

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The New Corporate Venture Capitalists

Corporate venture capital (CVC) funds are everywhere. The category is loosely defined as corporations starting venture capital arms to work with smaller startups.

Within CVC, there’s a subset of companies that use a third-party operating group to do their investing. The funds don’t function under their corporate parent’s branding. Instead, they make their own, separately branded fund. Take for example, a firm that was backed by a commitment of $1.2 billion. This is a thread different than say, Intel starting Intel Ventures and investing across startups under that branding.

Another recent example of this happening is Cisco starting Decibel, a VC firm that is an independent entity focusing on enterprise innovations.

“Decibel will execute its own investment strategy, fund operations, and portfolio management, all while still having unique access as a highly collaborative and aligned partner to Cisco,” the company said in a .

For independent venture funds spun out of corporations, check out , and .

The issue with traditional CVC is that they lack the longevity of a traditionally built out venture capital firm, according to , the CEO and managing partner of Next47.

He added: “It’s the cycle.”

This cycle, understandably, could leave the startups that work with a CVC fund in an unfavorable limbo. So much so that at least recommends doing quite the opposite: it brands itself as helping founders avoid traditional investment, and go the bootstrapping route. That brings us to our next topic: the group of investors who are convincing startups they are more than profit hungry, by never taking equity.

The Anti-Termsheet Club

, a new kind of venture capital-ish firm from and , doesn’t have any equity in the over 700 companies it works with. But it put investments in each of them.

How does that work?

Flexing its the firm’s strategy uses an algorithm to sift through a startup’s data and see if its a fit. The entire process was created to be shorter than the average investment timeline. The fund’s definition of the ideal investment? An e-commerce company that has positive ad spend and positive unit economics.

As companies are under demand to raise more venture capital money before going public, Romanow tells me Clearbanc wants to help founders keep more ownership of their company amid the trend.

Romanow cited how, for example, when went public Bill Gates owned of the company. For comparison, when Lyft went public, the founders only owned around of the company.

This data-only strategy has helped Clearbanc break patterns with investing in people who look and sound like the status quo. Romanow says they’ve funded 8 times more women than the average VC. Clearbanc has in 2019.

There are, of course, some aspects that will never go away from traditional investing. She says that while their deal flow is heavily driven by numbers, associates at Clearbanc have the ability to singlehandedly veto a deal if the founder and startups don’t match up culture or personality wise.

“There’s always got to be due diligence,” she said.

But what happens when you outsource that due diligence?

VC-As-A-Service

, a firm which we wrote about last month, invests in startups on behalf of corporations through its “VC-as-a-service” model. It manages over $600 million in assets across all of the large corporations it works with, and has done over 150 investments.

Corporate venture capital’s main issue is that corporations don’t have the motivation to help the startups they invest in, grow to the next step, says , the founder and CEO of Pegasus Tech Ventures. With a third party firm like Pegasus, he claims, a fund can help a startup grow beyond just one round. He claims that Pegasus has made multiple follow-on investments in 80 percent of their portfolio companies.

This idea of an ecosystem, where one sides feeds another, didn’t work well for at least one venture firm: . The company notoriously to participate in every stage of a portfolio’s life company, from startup to unicorn trying to go public.

Additionally Uzzaman says that Pegasus has the network of traditional VCs, unlike CVCs.

“We do not have any restriction from introducing the startup to other corporations and funds,” he said during a phone call. So they do. Once, a startup was even funded by three separate corporate funds underneath the Pegasus umbrella.

In the event of economic downturn, Uzzaman explained that half of their investments are outside the United States. They currently have a presence in 17 countries.

Big Picture

Regardless of all of this innovation and flashy changes, venture capital is a long term business. Returns take time, even up to 15 years, some say. So these new versions are, just like the startups they’re investing in, bets. This is just a part of the evolution, and you can be sure we’ll be tracking the success as and when the first returns roll in.

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