Canadian Fintech: Zūm Rails' product strategy 🚀
How Levr raised $1m. Fig & Lexop partner on collections tech. 1Password's acquisition.
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💰 Funding
Zūm Rails, a Montreal based payment gateway, raised $10m.
Zūm has been bootstrapped since launching in 2019. Impressive! But what I love more is their organic growth strategy:
The company’s original pitch was to offer integration into any payment rail (card, EFT, Interac, Visa Debit) using a single API.
If you’re a bank or fintech using Zūm to integrate payments, you’re 100% using other banking APIs to do things like verify the identity of a new customer using their bank account or looking into a client’s bank account to see how many liabilities they have with other lenders. But each integration with another API provider is another point of friction, which causes drop off. So Zūm consolidated them.
We’re also seeing the reverse happening in the industry: Open banking APIs like Flinks & Plaid recently launched their own online payment products for the same reason.
Levr, a small business loan marketplace, raised $1m.
The majority of their growth was in Q4 of last year. Here’s the reason why:
SMB loan application volumes over the holidays skyrocketed because of the January 18th repayment deadline for CEBA. CEBA was a partially forgivable small business loan program issued during Covid by the federal government.
But the kicker was, if businesses could not fully pay back their loans in time, they would not qualify for the “forgivable” portion.
So the feds created a refinancing extension period which allowed businesses to refi at any lender they’d like, as long as they applied first at their original lender.
This drove a huge wave of loan applications to brokers, lenders, and online marketplaces like Levr… and voila! Hockey stick user growth for the fintech. Good time to do a fundraise!
🤝 M&A
1Password, a Toronto based password management platform for developers acquired Kolide, an endpoint authentication platform.
In the work-from-home age, employees are accessing company systems from their personal devices. 1P allows companies to authenticate employees across these devices while Kolide detects the health of the device (endpoint) at the point of authentication. It’s a no brainer acquisition.
Think Research, a medtech company, was acquired by their lender.
Think Research was pursuing a pretty aggressive growth by acquisition strategy. To fund this they went public in an RTO in 2020 and raised several credit facilities.
Unfortunately this put them in a super leveraged position and eventually in violation of their covenants, forcing their lender, Beedie Capital to acquire them.
No one is happy about this one - especially Beedie.
IN PARTNERSHIP WITH THE BANKER SUMMIT
🚀 Product
Three very Canadian fintech partnerships this week:
EQ Bank, Canada’s 7th largest bank partnered with Vancouver based Trulioo for KYB. This is no doubt to help launch the bank’s new online small business accounts.
Fig, an embedded lender owned by Fairstone Bank partnered with Lexop, to build out their collection platform. Lexop allows lenders to compliantly contact borrowers across multiple channels to cure delinquent accounts.
Parachute, a provider of debt consolidation loans, launched a white label partnership program targeting Credit Unions.
Metronome, a data insights platform for homeowners launched in Toronto. The tool predicts maintenance needs, identifies rebates, and matches you with lenders & insurers.
Asset manager Brookfield plans to start a pool that invests in financial infrastructure, like payments systems. The firm, which is just shy of $1 trillion in assets, hired the ex-WorldPay CEO to lead the fund.
📈 Stat of the week
Double! - The amount of fee income a $400b bank in Canada charges vs the same sized bank in the UK, according to research group North Economics.
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Have a great week! See ya 👋