Last week when Power Corp. revealed it had marked up the valuation of its controlling stake in Wealthsimple, BetaKit reported that Power’s Q3 financial results indicated the Toronto FinTech giant was engaged in a third-party secondary transaction expected to close during the fourth quarter. At the time, Wealthsimple declined to share further details.
“We wanted to give [employees] the opportunity to sell some of the equity they’ve earned and gain additional financial flexibility.”
Diana McLachlan,
Wealthsimple
Today, The Globe and Mail reported that this deal saw existing, San Francisco-based Wealthsimple investor Iconiq Capital purchase about $100 million in stock from the challenger bank’s current and former employees. Iconiq is a family office that caters to many of Silicon Valley’s elite, including Mark Zuckerberg, Sheryl Sandberg, and Chamath Palihapitiya.
A Wealthsimple spokesperson told BetaKit that current and former employees were the only selling shareholders in this transaction, but declined to confirm Iconiq’s involvement or the size of the deal.
They did confirm, however, that the financing valued Wealthsimple at $5 billion, which makes it one of Canada’s most valuable private tech companies once again, alongside a group that includes fellow late-stage Canadian tech firm Clio, a British Columbia-based legaltech that recently conducted a sizeable secondary financing of its own.
“Our employees are the driving force behind Wealthsimple’s success,” Wealthsimple vice-president of people operations Diana McLachlan told BetaKit. “We wanted to give them the opportunity to sell some of the equity they’ve earned and gain additional financial flexibility. Our 10-year track record of success is due to the dedication of our employees and the trust we’ve earned from millions of Canadians.”
Iconiq appears to have increased its stake in the Canadian FinTech company shortly after one of its high-profile clients referred to Canada as “no longer a compelling place to invest” in a post on X (formerly Twitter) responding to a comment from Canadian Prime Minister Justin Trudeau about Canada’s competitiveness with the United States as an investment environment.
“Here is the harsh truth as someone who allocates capital in different parts of the world: Canada is no longer a compelling place to invest,” Social Capital founder and CEO Chamath Palihapitiya wrote. “Hasn’t been for a few years now. As a result, the economic prosperity of Canada will continue to shrink. This is despite an incredibly young, bright, capable and technical workforce that is second to none.”
Founded in 2014, Wealthsimple started as a robo-advisor but has since steadily expanded its investment capabilities and moved into other areas of money management, including spending and saving, crypto, taxes, and peer-to-peer payments.
RELATED: Power marks up value of Wealthsimple beyond 2021 peak
This marks Wealthsimple’s first secondary since 2021, when it announced a $750-million funding round that included Iconiq, consisted of $250 million in primary and $500 million in secondary capital to Power and its affiliates, and came at a $5-billion valuation. With Power’s latest markup and this secondary deal, Wealthsimple has regained the value it had lost on paper when Power and its affiliates slashed their valuations of the company during the downturn.
Today, the 10-year-old company is profitable with three million users and $58 billion in total assets under administration. Wealthsimple co-founders, CPO Brett Huneycutt and CEO Michael Katchen, recently joined The BetaKit Podcast to discuss the company’s journey, its growth of late, and how they plan to build “the largest Canadian financial institution.”
Feature image courtesy Wealthsimple.