Canadian Fintech: The Weird History of Aeroplan 🛬
Why did Wave go paid? Wisedocs raises A. SumoQuote acquired.
Good morning! Welcome back to Canadian Fintech, a newsletter for founders, operators & investors.
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💰 Funding
Paays, a pre-qualification platform for automotive dealers and OEMs raised $1m.
Wisedocs raised $12m to help insurers process medical claims faster. The startup turns medical docs (which are often just PDFs being faxed from doctors offices) into structured and searchable data.
Similar tech (known as OCR) is being used across the financial industry to process documents for things like loan applications and opening bank accounts.
🤝 M&A
Calgary based SumoQuote, a sales tool for roofers to create client quotes was acquired by JobNimbus, a CRM and invoicing tool for roofers. The combined entity is pretty much an end-to-end platform for roofing contractors
These types of businesses are referred to as vertical saas, where a niche industry (like roofers) can run their entire business off of one piece of software.
Vertical saas is a perfect use case for embedded fintech. JobNimbus can easily offer financial services like payments, builders insurance & invoice financing through fintech partners instead of building those products themselves.
Roofr, a similar platform that also has a Canadian founder, raised $31m last year.
Aimia, a company best known for its loyalty program with Air Canada, has been acquired by a Saudi family office. Let’s take a quick look at the very confusing recent history of the company:
1984 Air Canada launched the Aeroplan loyalty program
2002 Aeroplan was spun off and eventually sold to Aimia
2013 Aimia signed a 10 year credit card deal with TD & CIBC
2017 Air Canada announced plans to replace Aeroplan and partner directly with TD & CIBC
2018 Air Canada acquires Aeroplan for $450m
2020 Aimia transitions from a loyalty program to an investment holding company
I wrote about why retailers love loyalty programs in a previous newsletters here & here.
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🚀 Product
Wave, a small business accounting platform that was famously free is transitioning to a paid tier model. Here’s why and what it means for the industry:
Wave launched 15 years ago and raised over $100m before being acquired by H&R Block for $537m in 2019.
This level of funding enabled the company to subsidize their customers using the product for free.
But now that the company has hit scale, the strategy has shifted towards profitability. In 2022 they replaced their founder with a new CEO.
Since then they have doubled down on paid products like payroll, early payouts on invoices & receipt capture.
With that context in mind, going from free to paid isn’t so shocking. But I do think that it opens up the lower market for free accounting / banking fintechs that can subsidize their customers with a combination of VC and generative AI.
I wrote a bit about this in my new years predictions last month here.
Toronto based HR company Ceridian has rebranded to Dayforce, the name of a company it acquired in 2012. This unites the brand around their fintech product, the Dayforce Wallet, an earned-wage-access service that the company launched in Canada in 2021.
📈 Stat of the week
Desjardins is cutting 30% of ATMs & service centres. The caisse populaire’s 669 service centres accounted for just 1% of transaction volume, while its 1,559 ATMs accounted for 3%.
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Have a great week! See ya 👋