Ecommerce businesses operate on tight inventory cycles and dynamic seasonal shifts. Major shopping events like Black Friday or Prime Day often require planning months in advance, with income from these events not hitting the business bank account until much later. Capital is a necessary part of managing growth, catching seasonal opportunities, funding new production, or keeping up marketing momentum. But when capital decisions are reduced to cost, ecommerce founders can miss out. 

Clearco CEO Andrew Curtis sat down with Chris at Venn VC’s podcast to talk about ecommerce, cost of capital, and how putting cash flow back into the business can lead to ‘quantum leaps’ in growth

Understanding Cost of Capital in Ecommerce 

For financial decision makers, the issue of capital often comes down to cost. Business owners are urged to obtain funding at the lowest possible rate, which is often valid advice. For a manufacturing plant that takes out a 2 year equipment loan, a 2-3 point price difference will compound and erode profits over time.

Ecommerce is not the same: the ecommerce business model is faster, more transaction based, and closely tied to short cycles of inventory and sales. An infusion of capital might fund a specific inventory order for Black Friday and sell through it in 60 days. In this case, the same 2-3 price points are less important than the ability to move quickly and capture a major opportunity for growth. 

“The quantum and availability of capital provided at pace is really everything,” explains Chris. “If you can access that and accept the risk, that's so valuable to founders. [Founders] don’t need capital until they do. Or there’s a moment where they’re like, ‘Okay, we’ve got to take a leap here.’”

Ecommerce founders aren’t looking to service long-term debt, they’re looking to fund inventory, advertising, or logistics expenditures that get more products on the shelves. Traditional funding options — such as lines of credit, term loans, or SBA loans – are often designed for longer deployment. However, Chris urges founders and financial decision makers to think about the repayment cycle as well as the cost. 

“I’d say founders focus a little too much on the cost of capital,” Chris explains. “They’ll say, ‘It’s expensive,’ but what does that actually mean? If you’re debating between 12% and 17% on $400,000, and you need the capital to move forward, then the marginal difference isn’t what matters. If your margins can support it, the important thing is that you’re using that capital to take a meaningful step forward, put cash back into the business, and grow.”

Rather than being overly focused on cost, Chris suggests that what matters more for ecommerce brands is the pace of repayment: in early stages, founders need to focus on managing cash flow. 

Funding Partners like Clearco Support Strategic Growth for Brands

Using capital strategically enables ecommerce founders to leverage their margins, their demand, and their expertise. Chris, who helped lead Diggs through its refinance with Ampla, offers an example.

“Let’s say you need $400,000 for a PetSmart order,” he says. “The first question I’d ask is: what’s the use of proceeds? What’s your gross margin on that order? When do you need the capital? You’re working with a wholesaler, there’s a defined need, and you know what margin you’ll generate.

"When you look at the cost of capital relative to that margin, there’s a clear financial win—and a major cash flow win. Now ask yourself: can you find another capital partner who can move at the pace you need, and provide the kind of support and flexibility required in a situation like this? Most can’t.

"So, if your margin can support it, whether the cost is 13%, 15%, or 17% isn’t the real issue. You’re talking about a couple of percentage points on $400,000, over a short period of time—probably a five-figure cost. But if the unit economics work, this is about growing your business.”

Ecommerce Founders Should Optimize For Opportunities – Not Just Costs

For fast-growing ecommerce founders, capital is about more than just cost – and traditional methods of financial decision making may not always work in the ecommerce world. Capital partners that are aligned with the demands, cycles, and cash flow needs of your business can unlock massive growth. Access to the right partner at the right time can be the difference between missing out on a window of opportunity, or making a ‘quantum leap’ for your brand.