Canadian fintech Wealthsimple raises record $610m at $4bn valuation
Wealthsimple, the Toronto-founded wealth management platform operating in Canada, the UK, and US, has landed a $610 million (CAD 750 million) round of funding.
The investment, which marks one of the largest technology investments in Canada to date, is seven times the size of its last fundraise – which closed in October at just $87 million.
The fintech firm landed unicorn status last year, tripling its valuation in just seven months.
Its latest round was led by Meritech and Greylock. Other investors include DST Global, TCV, and Allianz X.
Canadian actor Ryan Reynolds and Toronto-born artist Drake are also investors. “Drake, see you later at my house,” says co-founder and CEO, Mike Katchen, in his blog post on the investment.
Wealthsimple is around 70% owned by Power Financial, a Power Corporation of Canada subsidiary controlled by the wealthy Desmarais family.
What is Wealthsimple?
The fintech started off as a robo-advisor back in 2014. It has since expanded its offering – most drastically this year.
Its growing 1.5 million customers now have access to a savings account, tax-filing software and a cryptocurrency-trading feature.
The start-up claims it helped more than one million Canadians file their taxes last year. This follows its acquisition of tax preparation app, SimpleTax, back in September 2019.
Wealthsimple’s CEO, Mike Katchen, told BetaKit last year that “responsible credit” products such as mortgages, as well as insurance offerings, are on the fintech’s roadmap.
Wealthsimple also soft-launched its peer-to-peer (P2P) money transfer app, Wealthsimple Cash, last year.
But it’s the start-up’s no-commission, Wealthsimple Trade service, which has seen the real growth this year.
Stock trading platform growth
Live in Canada since March 2019, Wealthsimple’s trading customers have surged since, especially during the pandemic-induced trading boom.
From the beginning to the end of 2019, trading customers more than doubled from 100,000 to 250,000. This saw assets jump from CAD 4.3 billion ($3.3 billion) to CAD 6.3 billion ($4.8 billion).
Then in the first six months of 2020, trading customers doubled to more than half a million. Assets shot up to more than CAD 8.4 billion ($6.4 billion).
According to CEO Katchen, the fintech captured the second largest number of new trading clients in Canada in the first half of 2020, behind only Toronto-Dominion Bank.
A different approach to Robinhood
Unlike other trading apps like Robinhood, Wealthsimple doesn’t offer options trading.
Wealthsimple’s marketing messaging is also different to Robinhood’s, despite frequent comparisons.
“Even though Wealthsimple is positioning itself as very aggressive on pricing, its marketing could not be more different than that of Robinhood,” Ian de Verteuil, a CIBC World Markets analyst, told the Financial Post last year.
“The tagline ‘Get Rich Slow’ hardly compares to the Robinhood approach, which includes the potential for fractional shares and a ‘video-game like’ app.”
Back in February, Wealthsimple’s Europe CEO Toby Triebel told FinTech Futures: “Trading apps are an afterthought. It’s like playing around and you can lose a lot more money.
“You wouldn’t put all your money into trading. 2019 has been great for the stock market but that can change – as the saying goes, my cat can pick stocks better than me.”
Whilst Triebel might still agree with this, Wealthsimple’s stock trading app growth last year points to the feature’s importance far above an “afterthought”.