Toronto-based FinTech startup Wealthsimple has raised $114 million CAD in equity financing. Following the raise, Wealthsimple claims it has reached a unicorn valuation of $1.4 billion CAD.
The investment was led by TCV, a growth equity investor focused on technology. Other participants included Greylock, Meritech, Two Sigma Ventures, and existing investor Allianz X. As part of the new funding, David Yuan, general partner at TCV, is joining Wealthsimple’s board of directors.
“As a business, we think it’s a huge validation of what we’ve built, and more importantly, where we’re going.”
TCV has backed over 350 technology companies, including Airbnb, Netflix, Peloton, Revolut, and Spotify. Greylock, a venture capital firm that focuses on enterprise and consumer software, has partnered with over 180 companies, while Meritech has partnered with 200 companies globally. The investment also marks the first time that Meritech has invested in the Canadian market.
The new financing comes on the heels of a busy year for Wealthsimple, which began expanding into new financial services verticals, including crypto assets as well as saving and spending. Mike Katchen, CEO of Wealthsimple, told BetaKit the startup plans to use the new capital to continue building out its current products, as well as to add new products as part of its broader push to replace traditional banks.
“Achieving a unicorn valuation from some of the world’s most respected investors is not only an exciting moment for us, but an exciting thing for the Canadian technology scene,” Katchen told BetaKit. “As a business, we think it’s a huge validation of what we’ve built, and more importantly, where we’re going.”
Katchen said Wealthsimple has seen growth across the board over this year. He claimed that Wealthsimple fell just behind TD Bank in terms of the share of new accounts opened. The startup also helped over one million Canadians file their taxes this year, after acquiring tax preparation app SimpleTax in September 2019. Wealthsimple currently has $8.4 billion in assets under management.
The startup, which was founded in 2014, has previously stated plans to divide its offerings into three pillars: saving and investing, responsible credit, and smart insurance. When speaking with BetaKit recently, Katchen said that “responsible credit” products such as mortgages, as well as insurance offerings are still on Wealthsimple’s roadmap.
“We are building a financial services company that is set on being a public business someday.”
In May 2019, it was revealed that Power Financial, a notable investor in the FinTech space and a backer of companies like Borrowell, Clearbanc, Koho, and League, owned a majority stake in Wealthsimple. Through subsidiaries, Power Financial held a 70.1 percent combined equity stake in Wealthsimple prior to this latest financing.
Power Financial still owns a majority stake in Wealthsimple, following this latest funding round. However, Katchen told BetaKit that Power Financial now holds approximately 61 percent economic ownership in the company.
“It’s important to me that people understand we are building a financial services company that is set on being a public business someday, and so we started that process two years ago, when we raised from Allianz X,” Katchen added. “This is another step towards a broader shareholder base.”
Also notable for the startup, it has named its new CFO after Leen Li recently stepped down from her role to become the CEO of the Wealthsimple Foundation, the startup’s initiative to help children save for post-secondary education. Aimee Fearon has filled the CFO role, Katchen confirmed to BetaKit.
Fearon previously served as the CFO of Newsela and was senior vice president of financial planning and analysis at OnDeck. Katchen highlighted Fearon’s experience in taking companies public as a key attribute she brings to Wealthsimple. When raising its $100 million round from Allianz X last year, Katchen told BetaKit his goal was to eventually get Wealthsimple to the size and scale to eventually go public.
“A big reason that new investors have been attracted is because they see the path towards being an exciting public story, and that’s not too far off for us, but not what we’re focused on right now,” the CEO said when recently speaking to BetaKit.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
