A family pair of Canadian financial services insiders have teamed up with a group of successful founders to launch new FinTech-focused venture capital (VC) firm Exit North Ventures.
Founded and led by Canadian Fintech newsletter’s Tal Schwartz and his father, Canadian Lenders Association (CLA) founder Gary Schwartz, Toronto-based Exit North is raising a $20-million CAD fund to back early-stage FinTech startups across Canada.
Last year, Tal and Gary Schwartz set out to build a fund around Canadian FinTech entrepreneurs with exits under their belts. Since then, the father-son duo have raised over $5 million from founder LPs, brought some on to help vet and advise startups, and invested in six nascent FinTech companies.
Once Exit North began targeting exited Canadian FinTech founders as LPs, “everything clicked,” GP Tal Schwartz said.
“The name Exit North really reflects the composition of the folks involved,” Exit North general partner (GP) Tal Schwartz told BetaKit in an interview.
In addition to his venture partner father—who previously built and sold his own tech company, mobile messaging-focused Impact Mobile—Exit North’s investors include five other exited Canadian FinTech founders as venture partners.
The group includes Financeit co-founder and executive chair Michael Garrity, Paradigm Quest co-founder Katherine Gregory, Beanworks co-founder Catherine Dahl, LendCare co-founder Ali Metel, and Savvyy co-founder Norm Cappell. Tal Schwartz declined to disclose Exit North’s limited partners (LPs) but claimed they consist largely of other high-net-worth individuals with similar profiles and financial services expertise, plus some family offices and institutions.
Once Exit North began targeting exited Canadian FinTech founders as LPs, “everything clicked,” Tal Schwartz said. The GP noted that the firm’s initial target was $5 million, a mark the fund “pretty quickly blew past” in a first close held a year ago, which led Exit North to set its sights higher. He declined to disclose how much exactly Exit North has raised to date, but said he expects the firm to reach its new, $20-million target “imminently,” despite particularly tough VC fundraising conditions.
Exit North plans to invest $250,000 to $1 million into Canadian FinTech startups at the pre-seed and seed stages, focusing on business-to-business tech in areas like capital markets, insurance, lending, payments, treasury, and wealth, as it builds a portfolio of 30 companies.
The VC firm has made six investments to date, backing startups like Toronto private lending software company Baseline, Calgary-based emissions tracking platform Arbor, Vancouver spend management for ad agencies startups Opal, Vancouver-based law firm operating system provider Walter, and two other undisclosed Canadian FinTech firms. According to Exit North, most of its portfolio companies have taken on one of its partners as an advisor.
Tal Schwartz previously spent five years as head of policy and research at CLA, and nearly three years as a product manager at San Francisco-based bank infrastructure tech company Nomis Solutions. Prior to launching Exit North, he made several angel investments, backing Canadian FinTech startups like NetNow and Bree.
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In 2022, Tal Schwartz created the weekly Canadian Fintech newsletter, in which he tracks Canadian FinTech startup funding, product, and acquisition news, and unpacks and analyzes broader trends in Canadian lending, payments, banking, and insurance. Today, Canadian Fintech reaches over 11,000 subscribers.
Through this work, Tal Schwartz has developed a sizeable network in the FinTech space, which he has leveraged to source potential deals for Exit North. The VC firm’s six-person investment committee ultimately decides whether or not to invest. It features Tal and Gary Schwartz, Garrity, Gregory, Dahl, and Metel, and leans on its FinTech founder members’ expertise.
“Those two things together, I think, are going to make us a great VC,” Garrity told BetaKit in an interview.
Last year saw a decline in VC investment and deal activity in Canada’s FinTech sector, but Tal Schwartz is not concerned. Asked why they decided to launch Exit North now, he said, “I don’t think that there’s ever been a better time to start a FinTech fund in Canada.”
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“The economy is rebounding, rates are coming down precipitously, [and] we’re only now just starting to get regulatory clarity, which means that our portfolio companies will ultimately be able to take advantage of things like open banking and real-time payments,” the GP added, noting that the emergence of artificial intelligence has also made it cheaper to launch startups.
Tal Schwartz described Garrity, who founded and led Toronto-based financing provider Financeit as an “amazing example” of someone who has built, scaled, and sold a category-leading FinTech company. Goldman Sachs acquired a majority stake in Financeit in 2017 for an undisclosed amount, before selling it to Wafra Capital Partners in 2022, reportedly for more than $350 million.
Garrity described Exit North’s LP and venture partner composition as unique. He said the fund is “made up of Canadians who’ve been there, done that, and made money for their shareholders at scale” [in FinTech] who are willing to put their own capital and expertise to work. He began as an LP before becoming a venture partner after identifying an opportunity to give back and generate a strong financial return.
“Our focus is on an exit,” Garrity added. “That’s why it’s called Exit North—it’s not called Valuation North … Our goal is to help companies grow into sustainable businesses that are worth something and to go and achieve what they’re worth.”
In the early days of Financeit, Garrity said the support he received from others with a track record of starting and selling companies was key, noting that these folks helped Financeit raise money, land customers, build trust with lenders, and hone its story. As an early-stage FinTech entrepreneur, he argued that it is essential to have connected and experienced mentors at your side, something he hopes to provide with Gregory, Dahl, Metel, and Gary Schwartz.
Gary Schwartz has built a large FinTech network of his own through his work as founder, president, and CEO of CLA, which represents innovative lenders and currently serves more than 300 members. He has also individually invested in a slew of Canadian tech companies to date, including domestic FinTech startups like Paays, Lenders API, Padder, and Yield Exchange.
“Our focus is on an exit. That’s why it’s called Exit North—it’s not called Valuation North.”
Michael Garrity, Exit North
As he carves a path for himself as a FinTech writer-turned-investor, Tal Schwartz views the network and access to founders in FinTech he has developed as assets that will serve him well. “Venture is a people industry,” he added.
Tal Schwartz argued that there is overlap between the skills he and his father used to build Canadian Fintech and CLA and those required in VC.
“The jump from being a community platform organizer to the position where we are now—where we’re actually making investments in a lot of these early-stage founders—was incredibly natural,” he said.
Going forward, Tal Schwartz plans to keep writing Canadian Fintech, noting that he sees it as an amazing source of deal flow and means of building Exit North’s brand and reputation.
“I think that [Tal Schwartz’s] unparalleled access to dealflow in this sector is a crucial component of what is going to make this successful,” Garrity added.
Feature image courtesy Exit North Ventures.