Flinks, a Montréal-based FinTech startup that helps financial institutions gain financial insights and connect user bank accounts, has closed its Series A round at $16.2 million CAD, bringing its total funding raised to date to $19 million.
“[The round is] a confirmation that the current shareholders believe in where we’re going.”
The round included a number of return investors including NAventures, the corporate venture capital arm of National Bank, which led the Series A. Fellow return investors Luge Capital and Panache Ventures also participated, as did new investor Intact Ventures. The round consisted of $11 million of equity financing and $5.2 million of debt financing, with National Bank, one of Flinks’ partners, providing the debt financing through its Technology and Innovation Banking Group.
Proceeds from the Series A round will be used to expand the startup’s offering to new verticals, including wealth management, and will allow Flinks to grow its presence in the United States.
“What’s great with the current composition of this round is that it’s a confirmation that the current shareholders believe in where we’re going, but that they also believe the fact that we’re able to deliver results,” Flinks CEO Yves-Gabriel Leboeuf said.
Flinks’ Series A was oversubscribed, Leboeuf told BetaKit, noting that the startup raised “a little more” than what was targeted initially. The economic uncertainty around the COVID-19 pandemic, Leboeuf explained, prompted the desire to secure additional funds.
“This additional funding provides what the company needs to navigate a period where we still don’t know how venture capital firms will react,” the CEO said. “We know that digitization is more than a trend, but a real reshaping of the industry. We’re confident, nonetheless, that this investment will help us jumpstart the next phase of our mission and consolidate our position.”
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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 startup claimed it has tracked higher volumes of requests for loans and account openings during the pandemic.
While Flinks currently has small-scale operations in the US, Leboeuf said the new funding will help the startup “properly” launch and scale its US operations. Flinks will look to open its US office in either San Francisco or New York, adding to its two existing locations in Montréal and Toronto. The company also plans to double its 65-person team over the next few months.
“We’re confident … that this investment will help us jumpstart the next phase of our mission.”
Philippe Daoust, managing director of venture capital at NAventures, which has invested in Flinks since its $1.75 million seed round in 2018, told BetaKit his firm wanted to support Flinks in its international expansion. He noted that the FinTech startup may also have future opportunities to expand into European geographies as well.
“There’s been consolidation in that sector,” Daoust said. “Plaid was acquired by Visa, MasterCard just acquired a platform last week or the week before as well. I think [Flinks has] got a great space to be that small contender to all those big businesses.”
Along with geographic expansion, Flinks is also looking to use the $16.2 million to scale a line of business that the company has been developing over the last few years. Leboeuf told BetaKit Flinks has scaled back on some of its R&D and new product activities in order to focus more on that new line of business. Flinks has entered into the beta phase of a new wealth management aggregation product aimed to help wealth managers gain financial insights through data. This represents a new vertical for Flinks, which has so far focused on aggregating data within the retail banking sector.
The relationship between banks and startups has been described in recent years as a “power struggle,” with banks focused on risk aversion and startups knuckling down on the user experience. However, many banks are upping their engagement with younger companies looking to disrupt the financial sector.
Flinks works primarily with smaller financial institutions, but has relationships with a few of Canada’s Big Five banks and is currently working on several projects with National Bank. Leboeuf highlighted how the startup’s relationship with incumbent financial institutions has evolved over time.
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“When we started a couple of years ago, financial institutions were seeing us as hackers and wanted to shut us down, because their vision was that we were stealing their data,” Leboeuf noted. “But I think it is becoming clear now … that the data belongs, in a sense, to the consumer, and that if the consumer wants to grant access to [their] data to a software company, [they need] to be able to provide the actual licence to that company. We basically facilitate that entire process.”
Daoust told BetaKit when creating the NAVentures fund, National Bank wanted to take a partnership approach to FinTech startups, rather than taking an adversarial stance.
“All the banks need to transform right now. Technology is moving very fast,” Daoust said. “Rather than take a stance where we say, we’re going to fight the FinTechs, we’re going to block access to the market to the FinTech, our approach was always ‘how can we work with the FinTechs? How can they how can we use what they’re building to transform the bank faster and offer better services to our clients?’”
Leboeuf said Flinks sees potential to sell its products into different financial sectors, with the startup eyeing insurance data, government data and events, and potentially telecom data.
Image source Flinks via Facebook.