Toronto-based corporate card and expense management technology startup Float has secured a $50-million CAD credit facility from Silicon Valley Bank (SVB), now a division of United States (US)-based First Citizens Bank.
This capital allows the FinTech firm to expand its Charge Card, a no-personal-guarantee credit program Float launched in 2022 to give select small and medium-sized businesses (SMBs) up to 30 days of interest-free funding to extend their runway and invest in growth.
“Raising this kind of a facility is not like raising venture capital or equity. It’s actually a lot harder. It’s a lot more complicated. It’s something that requires true financial innovation.”
Rob Khazzam, Float
Amid today’s challenging economic environment, many companies are struggling to access the funding they need, which has been reflected in the 300 percent year-over-year payment volume growth in 2023 of its Visa-issued Charge Card, which Float plans to double down on with this funding.
“We see it as a key need for businesses, we’ve definitely seen demand for the product, and we were able—after a pretty long and exhaustive search—to find a partner that we thought could provide a really compelling partnership and fuel this growth,” Float co-founder and CEO Rob Khazzam told BetaKit in an interview.
Float has worked with SVB before, securing $10 million in debt from the tech financier as part of its Series A round in late 2021. After SVB collapsed in March 2023, First Citizens purchased much of SVB’s business, while National Bank acquired SVB’s Canadian loan book.
Speaking to Float’s decision to work with the bank again, Khazzam said Float canvassed the market in search of “compelling terms [and] a good long-term partner” before landing on SVB. He credited the bank’s willingness to build this “first-of-its-kind” credit facility as one of the factors that convinced Float that SVB was the right fit for this deal.
Khazzam noted that Float has been working on closing this credit facility for more than a year and was doing so amid a particularly tough market. “It’s a long process,” he said. “Raising this kind of a facility is not like raising venture capital or equity. It’s actually a lot harder. It’s a lot more complicated. It’s something that requires true financial innovation.”
Founded in 2019, Float aims to simplify spending for Canadian companies. The startup’s flagship business finance platform combines corporate cards with spend management software, giving finance teams real-time visibility into business spending as well as the capacity to spend, track, approve, and reconcile expenses.
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Today, Float serves over 3,000 Canadian businesses, including Neo Financial, The Fox & Fiddle, and Knix. The startup, which caters largely to SMBs left underserved by banks and legacy solutions, claims to have seen continued growth despite challenging tech and FinTech market conditions.
Khazzam said Float has no plans to bring its business finance platform to the US anytime soon, noting that he still sees plenty of room for Float to grow in Canada, where he said it still currently has less than one percent market share.
“The vast majority of companies in Canada have never heard of Float,” said Khazzam. “They are still using the old, antiquated tools that our product displaces, so we feel like we have a really long way to run.”
Float’s broader mission is to serve “the entire Canadian economy,” Khazzam said, adding that startups and tech represent only “a small slice of [that] pie.” Given this, Float has been expanding beyond just tech firms to serve mid-market Canadian companies across other sectors, including media, manufacturing, and consumer-packaged goods.
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Just two years ago, about 70 percent of Float’s customers were venture-backed tech startups. Today, less than 20 percent fall into this group.
“We’re having a lot of success proving to ourselves and the market that we can serve other businesses, and for us, that’s a great thing,” said Khazzam. “We want to be able to serve every company in Canada and do so really, really well.”
Last year, Float released the second version of its corporate card offering and launched a high-yield product geared towards Canadian SMBs to help them contend with high inflation.
Float’s backers include Tiger Global, Golden Ventures, Susa Ventures, Michael Hyatt, Tiny Capital, Garage Capital, A-Star, and Global Founders Capital. The startup raised $5 million in seed funding and $37 million in Series A financing in 2021, followed by $10 million in debt from SVB, plus some undisclosed additional capital from existing investors. Khazzam declined to disclose whether Float has raised any more equity financing since then.
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He did note, however, that over the last year, Float reduced its burn from its peak level by over 60 percent. “We’ve pulled a lot of levers to improve the efficiency of the business and that’s allowed us to make obviously what was already a pretty large Series A [round] go pretty far.”
While Float has avoided “any major restructurings,” Khazzam said the now 85-person firm has been diligent about performance management and disciplined about where it grows amid current economic conditions.
Some of Float’s customers are doing well right now, while others are experiencing difficulties. “We’ve seen all of it and we’re not immune to it,” acknowledged Khazzam.
But as businesses’ purse strings have tightened, Khazzam claimed that demand for products like Float that save businesses time and money has grown—and so has Float. While he declined to disclose Float’s revenue, Khazzam claimed that it has more than doubled on a year-over-year basis.
Feature image courtesy Float.
