Canadian Fintech: Alternative investing goes mainstream 🫘

Crypto deal falls apart. Introducing 2 new business banks. Layoffs accelerate.

Morning! 

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💰 Funding

• Vancouver based blockchain company Blockstream raised $125m in debt to expand its bitcoin mining operation.

• Notch, a platform for restaurants to manage orders, reconcile bills and invoices and process payments raised $10m. The company used to be called Chefhero.

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🤝 M&A

• Crypto trading platform Coinsquare is backing out of a deal to acquire competitor Coinsmart in favour of a merger with publicly traded Wonderfi. Wonderfi recently acquired rivals Coinberry and Bitbuy.

• Cross border payment company Ascendant was acquired in a PE deal.

• Small business lender Merchant Growth has acquired embattled competitor Lendified. Merchant Growth also acquired rival Company Capital last year. 

• After suffering solvency issues, small business financial dashboard Nuula was acquired by Nav, a marketplace for finding business financing.  

• Payments platform Nuvei has acquired US competitor Paya for $1.7b. Nuvei made similar acquisitions last year for payments companies in crypto and in sports gambling.

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🚀 Product 

• Wealthsimple crossed the 3m customers mark.

• Alternative investments like private equity and private credit used to be exclusively available to the rich. Now retail investors are getting access as well:

  • Obsiido a retail alternative investment platform came out of stealth. 

  • BMO will let clients invest in portfolio companies backed by VC Georgian.

  • Wealthsimple allows clients to invest in VC via Accolade Partners.

• Canada has two new fintech business banks:

  • Otter launched a bank account for freelancers to manage their business and personal accounts.

  • Keep Technologies launched a multi currency bank account. They launched a corporate card product late last year.

  • Add these to the list of recent launches: Loop, Vault, Pillar & Truly Financial.

• EQ Bank launched its own debit card, linked to their high interest savings account.

  • EQ attracts price sensitive clients through their market leading yields on GICs and savings accounts. But the challenge with servicing price shoppers is that they’ll leave if a competitor offers a better rate. A debit card with strong perks (cashback, fee waivers at atms, etc.) is EQ’s attempt at creating a sticky and high value banking experience, and hopefully also some customer loyalty. 

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💼 Layoffs

With rates rising and fintechs big push towards profitability, more layoffs have been announced: 

• Clearco (30%)

• Shakepay (25%)

• Canada Drives (undisclosed)

• Clutch (65%)

• Benevity (14%)

• Lightspeed (10%)

If you’ve been affected, let me know if I can help intro you to folks in the Canadian Fintech Newsletter network.

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⚖️ Policy 

• OSFI is tightening restrictions in mortgage lending. Borrowers will need to qualify under the higher of a) a stress test rate or b) the actual rate plus 2%. Why? Rates have risen 425 bps in a year putting borrowers at higher risk of default and variable rate holders into negative amortisation territory. 

• BC became the first province to require a 3 day cooling-off period for homebuyers. The protection is meant to give purchasers more time to arrange financing or do home inspections (often ignored in a hot real-estate market). Kind of a weird time to introduce this given that the market has already cooled off.

• The BoC was the first central bank in a G10 economy to hint it was ready to pause further interest rate hikes, noting in December that there had been a slowdown in domestic demand. Members of the US Federal Reserve and the European Central Bank have indicated they will “stay the course” and continue to raise rates in an effort to tamp inflation. 

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🎂 Number time!

• $2,024 - the average rent in Canada. That’s a 12.4% YoY increase.

• 1/10 - the percentage of Canadians that do not file taxes. 

• 44% - Canadian real estate overvalued against income according to The Economist (see graph).

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👀 Who’s hiring?

• Iceberg Finance, Business Development Manager (London)

• Iceberg Finance, Business Development Manager (Vancouver)

• Google, Chrome Payments Product Manager (Montreal)

• Brex, Credit Science & Underwriting (Remote)

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As always, thank you for letting me appear in your inbox twice a month! 

- Tal Schwartz

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