Canadian Fintech: Stephen Smith 🐐
Will Lightspeed follow Nuvei again? 5 funding rounds. Rent reporting's big moment.
Good morning! Welcome back to Canadian Fintech, a newsletter for founders, operators & investors.
I often get asked “how do I get started in the Canadian fintech industry”? McGill’s online fintech program is a great place to start. I highly recommend checking it out!
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💰 Funding
ZayZoon, an earned-wage-access (EWA) platform, raised a $20m extension round. They raised $34m only 6 months ago.
BeniPlus, a small business employee benefits platform raised $1m, led by Axis Insurance, a brokerage.
RealSage, a data analytics platform to help multi-family rental managers improve their pricing & reduce vacancies, raised $5.5m. They raised $2m less than a year ago.
Rails, a Toronto based crypto exchange, raised $8.4m. The founder previously founded and sold crypto wallet BlockEQ to Coinsquare.
Tofu, a recruitment platform for candidates that other companies have already vetted, but not hired raised $1.2m.
If you’ve ever made it to last round interviews after weeks of case work… this one should hit 🥹
🤝 M&A
Fairstone Bank and Home Trust are merging in a $6b deal. The new entity will have $30b in assets, 2m customers and 250 branches across Canada.
Both businesses target a similar demo (non-prime Canadian consumers) but with different financial products:
Home Trust with single family residential mortgages.
Fairstone with consumer loans and several indirect products including auto loans, Walmart’s credit card portfolio and embedded loans via Fig Financial.
The combined entity will be able to cross sell products, streamline operations, and accelerate their deposits business at a moment when the Bank of Canada is hinting at a rate cut.
Canadian banking legend Stephen Smith will own 75% of the combined entity 🤯
Lightspeed and Nuvei can’t stop copying each other!
Both are Montreal based payments companies.
Both share Quebec’s pension fund as a major shareholder.
Both shot up during covid and have recently crashed in the public markets.
Both were targeted by short seller Spruce Point.
Now both are likely to go private… Nuvei officially announced its acquisition by Advent international for $8.5b, while Lightspeed’s CEO hinted at it.
After 18 months HSBC Canada is officially part of RBC.
Flare Systems, a Montreal based cybersecurity firm that monitors sensitive information being sold on the dark web acquired US competitor Foretrace.
Love to see Canadian companies acquire vs being acquired!
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🚀 Product
SingleKey, a Toronto based tenant screening platform, partnered with Nova Credit to pull credit data on new-to-Canada renters.
Mogo, one of WonderFi’s largest shareholders, is calling to overhaul the crypto exchange’s “disorganized board” 😬
PayReel, an American HR platform, expanded to Canada to compete with Rise, Humi, Wagepoint & Wave.
Moonarch, a Toronto based platform for investors to discover tech companies, is now writing their own cheques.
Evolve is launching the most 2024 ETF of all time: a fund that uses AI to… index AI companies 🤦
⚖️ Policy
In an unusual move, the federal government is giving a sneak peak of what’s going to be in the federal budget later this month. Equally surprising was mention of rent reporting:
“Renters deserve credit for the money they put toward rent over the years, especially when it comes time to apply for a mortgage for their first home. We’re going to amend the Canadian Mortgage Charter and call on landlords, banks, credit bureaus, and fintech companies to make sure that rental history is taken into account in your credit score.”
Reporting rent payment data to credit bureaus is done by tracking the payments a landlord receives, either through their payment processor or through open banking. If done consistently it can increase credit scores, particularly for consumers with few tradelines on their files.
FrontLobby was the first Canadian fintech to aggregate and furnish rent payment data to Equifax. Since then it has taken off with companies like Borrowell, Zenbase, and Chexy.
For any Finance Canada readers of the newsletter, here are some other fintech for renter concepts for future budgets 🤓
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Have a great week! See ya 👋