More than a year after joining the Royal Bank of Canada (RBC), Sid Paquette is finally ready to reveal the details behind his newly-constructed innovation banking group.
Officially called RBCx, the technology and innovation banking group has also announced what it calls a full-service platform that provides access to a suite of financial and advisory products.
“We’re really thinking outside of the traditional box that most of our competition is operating within.”
– Sid Paquette, RBCx
Speaking with BetaKit, Paquette called RBCx’s approach unique in the Canadian innovation banking space. With Paquette and other notable Canadian venture and banking investors at its helm, RBCx is looking to bring the venture investing model into innovation banking in Canada, from debt deals, to indirect and direct investing.
“At a high level, this platform is being built with one mandate, and that’s to help tech and innovation companies scale, full stop,” said Paquette, in an interview.
RBCx is in charge of the delivery of all banking products and services to tech and innovation companies for RBC. This includes debt capital solutions, advisory support, a partner network with curated events and content, as well as a marketplace with product offerings, such as deals for cloud providers.
“We’ve taken a very holistic view to help impact an innovation company,” Paquette explained. “And this isn’t about providing better terms and conditions on standard banking products. This is about providing access to products and services that matter, both for our tech clients and their employees. And we’re really thinking outside of the traditional box that most of our competition is operating within.”
“When we think about and look at this platform, this doesn’t exist anywhere, not in the breadth and the scale of what it is that we’re doing,” Paquette added.
RBCx claims it differs from competitors through its operational focus, providing the hands-on support often seen at venture firms, in addition to a suite of products and services outside of financing options.
Paquette, who was hired in early 2020, spent the last year building out the RBCx platform as well as the team, which now sits at 85. While the majority of that team (60) came from other RBC departments, the group plans to continue its hiring spree with outside hires moving forward.
RBCx’s leadership team also features a similar mix of RBC internal experience and newcomers, with about half joining as outside hires. Paquette has brought on a notable team of investment players in the Canadian tech landscape to help him.
On the innovation banking side, Paquette poached Tony Barkett and Tyler Kirk from Silicon Valley Bank. Paquette also attracted peers from his OMERS Ventures days: Nicole Kelly and Anthony Mouchantaf, the latter of which is serving as RBCx’s director of venture capital.
“It’s definitely not rocket science, but it is a matter of putting it all together.”
The team has been actively making deals over the past year even as RBCx spent the time “re-architecting” the entirety of RBC’s innovation banking strategy. That strategy includes typical innovation banking deals, providing operational support, as well as direct and indirect investing. With a growing team of operational leaders, RBCx is essentially operating as a central point for RBC’s innovation investments.
“We are combining three different aspects as it pertains to the technology and innovation sector – the delivery of all banking services and products to technology and innovation companies, VC fund investing and finally, we are working on a direct investment strategy in cases where it makes commercial sense for RBC,” said Paquette.
With this strategy, RBCx works closely with internal RBC teams (Capital Markets, RBC Ventures, etc.), supporting deals. RBCx will eventually do the same for direct company investments as well. While Paquette remained coy on the details of RBCx’s direct investing strategy, he did indicate the process would be similar to how it handles VC fund investments, where RBCx acts as a lead sponsor within the bank.
Vancouver-based Version One Ventures is one recent example of RBCx’s role guiding investments. The firm recently secured $100 million USD across two newly announced venture funds. RBC came in as a new investor, with RBCx’s team identifying and supporting the deal.
“Functionally and officially, RBCx puts its hand up and says, ‘this is an excellent fund, Royal Bank of Canada should be a limited partner,’” said Mouchantaf. “And then we’ll do another round of diligence with our partners in [RBC] Capital Partners, which is really focused on all the traditional institutional, due diligence, … reporting, [and] legal.”
Unlike other innovation banking teams, ‘sponsor’ at RBC doesn’t mean a warm lead or a gentle recommendation to other partners within the bank; RBCx acts like a true sponsor and active participant to get the deal done.
“It’s definitely not rocket science, but it is a matter of putting it all together,” Paquette said of RBCx’s approach. “I can absolutely tell you, in an organization like a large financial institution, you better have complete buy-in within that entire organization to make this happen. Otherwise, it’s never gonna happen.”
“[RBC is] the only one, to our knowledge, that has that complete buy-in within the organization,” Paquette emphasized. “When we think about some of the stuff that we’re doing … this would be 10 years down the road before we’d be able to come to market, [without RBC’s support].”