After giving up majority ownership to a Canadian banking incumbent, Flinks’ CEO says the transaction is a signal the Montreal FinTech firm is ready to go after the competition.
National Bank of Canada announced yesterday a commitment of $103 million CAD to take a controlling share in Flinks. Canada’s sixth-largest commercial bank will spend $73 million on a secondary purchase from existing shareholders, with an additional $30 capital injection into Flinks to accelerate the company’s expansion activities across North America. The full transaction, which is expected to close in September, will give National Bank an 80 percent preferred share equity interest in the company.
“The big bet we wanted to make was to go in and take a stab at the incumbent in our space in the U.S.”
Yves-Gabriel Leboeuf, Flinks’ co-founder and CEO, told BetaKit the company wasn’t looking to raise additional funding in September. The CEO also declined to disclose which investors are being bought out via secondary. Past investors include Luge Capital, Panache Ventures, and Intact Ventures.
“We will say, however, that [National Bank] has been an early partner for Flinks and this new investment is a testimony of the strength of our strategic relationship and the faith they have in Flinks to conquer the North American market,” Leboeuf said.
Flinks launched in April 2017 as a solution for FinTech companies to connect their apps with customers’ bank accounts, verify account balances, and access transaction histories. The startup later expanded beyond these capabilities to find useful insights with data. Flinks works with businesses in the lending, investment, and banking sectors.
“The big bet we wanted to make was to go in and take a stab at the incumbent in our space in the U.S.,” Flinks founder and president, Frédérick Lavoie, told BetaKit in April.
That incumbent is none other than Plaid, a FinTech startup that also helps connect consumers’ bank accounts to financial applications, which raised $425 million USD in a Series D round of funding in early April.
Following the announcement of new financing, Leboeuf doubled down on Flinks’ future plans.
“We already had North-American ambitions, and we’ve achieved much in the last year, with great results; now we just have the means to accelerate on them. We know we have the right business model and we are always striving to develop products that clients want; this new influx of capital is just the confirmation that Flinks can become a real giant in the fintech industry,” Leboeuf told BetaKit.
Leboeuf said Flinks has “grand plans,” starting with expanding its product offering in analytics and data enrichment, and growing its market share in the wealth and lending spaces. He said he also anticipates doubling the company’s staff.
This new injection of equity from National Bank comes on top of a Series A round of $15.2 CAD, which brought Flinks’ total funding to date to $19 million in July 2020.
That round was led by NAventures, the VC arm of National Bank. Through NAventures, the bank has held shares in Flinks since 2018.
“The transaction strategically positions the bank in a high growth market to continue to enhance customer experiences and benefit from future technology-driven innovations,” National Bank noted in its quarterly report of the new equity.
Marie-Pierre Jodoin, Senior Manager, Public Affairs and Corporate Social Responsibility at National Bank told BetaKit declined to comment beyond what was in the bank’s third-quarter 2021 financial release.
NAventures invests in, partners with, and scales early to mid-stage companies, including FinTech startups like Flinks, Mylo, and Koho. In July 2020, the bank invested nearly $50 million into Toronto-based digital wealth management platform startup Nest Wealth.
As of April 30, 2021, National Bank had $351 billion in assets and more than 26,000 employees.
“Our plan has always been to build the most easy and efficient data platform… This investment is not only a confirmation that we are able to realize that vision, but that the financial sector is ready to embrace it.”
– Yves-Gabriel Leboeuf
National Banks’ announcement takes place as the financial space in Canada undergoes rapid change, including the release of the recent open banking report, as well as increasing investment in FinTech firms.
Total FinTech investment in Canada skyrocketed to $4.8 billion in the first half of the year, already surpassing the previous annual record, set in 2017, according to a KPMG report looking at the first half of 2021.
The year has already seen the creation of four new Canadian FinTech unicorns: Wealthsimple, with its recent Series D; Trulioo, which raised a Series D; Dapper Labs, which raised a $305 million USD round; and Clearco (formerly Clearbank) with its Series C investment.
“These late-stage mega deals are fuelling the future of the FinTech industry in Canada as we watch how these companies are achieving a global status while maintaining their strong Canadian roots,” the report said.
Canada is now home to approximately 700 FinTech startups, with 18 of those founded in 2020, according to a 2021 Accenture report.
“With Canadian regulations and consumer behaviour evolving, competition for the country’s banking clients may begin to accelerate. Given Canada’s strong and trusted financial system, the most exciting developments may take place at the intersection between the strengths of incumbents and those of fintechs,” the Accenture report noted.
Back in Montreal, Leboeuf added: “It’s of course amazing news and an incredible chapter in Flinks journey. Our plan has always been to build the most easy and efficient data platform, so financial service providers of all sizes can build the future of finance. This investment is not only a confirmation that we are able to realize that vision, but that the financial sector is ready to embrace it.”