Wave raises $32 million from RBC, Portag3 Ventures

Toronto-based Wave has announced a strategic financing round of $32 million CAD from National Australia Bank (NAB), RBC, Portag3, and Exhibition Capital. The investment also includes funding from existing investors CRV, Social Capital, BDC IT
Venture Fund and BDC Capital, OMERS Ventures, Harbourvest and OurCrowd.

The company plans to use the funding to double down on development of financial solutions integrated in its core platform. Speaking with BetaKit, CEO Kirk Simpson declined to mention specifics on how the strategic partnerships would inform the company’s next product rollouts, He did say that the company’s payroll, payments, and lending aspects have been doing well.

“The vast majority of [SMBs] fail because of cash flow concerns. So how do we provide insight and help on cash flow concerns?”

“This is a continued acknowledgement of what’s happening in the industry in terms of FinTechs and the banks understanding where it makes sense to partner, where it makes sense to compete,” said Simpson. “With RBC and NAB coming into the round, you’ll continue see more announcements from us over the next several months as it relates to partnerships with these two companies and things we want to roll out together.”

Since it raised its $6.7 million round in March 2016 and announced its foray into the lending space, the company has been working to move beyond its initial reputation as an accounting platform, and establishing itself as a financial services platform targeting entrepreneurs. Wave would go on to raise another $14.6 million later that year, and recently launched its lending platform with OnDeck.

With a platform that manages the gamut of entrepreneurs running their business — from invoicing and accounting, to payroll and billing — there is potential in the company being able to
Identify a need for specific financial services at the exact time of need. Power Financial-backed Portag3, which is focused exclusively on FinTech investments, seems to see the potential too; its portfolio puts Wave in good company with investments spanning across the financial services spectrum, like Wealthsimple, Borrowell, Clearbanc, Koho, and LEAGUE.

Wave, which has grown to 150 people, so far has over 2.5 million global signups on its platform. The company also has plans to integrate artificial intelligence and machine learning algorithms,
to automate basic accounting functions provide actionable insights to entrepreneurs on their businesses.

“We’re proud to support Wave as they continue to bring solutions to market for entrepreneurs in Canada and around the world,” said Mike Dobbins, head of strategy and corporate development at RBC. “This investment is part of our commitment to support the scale up of emerging fintech companies in our economy, recognizing the critical role they play in Canada’s Innovation agenda.”

Simpson suggests that the most opportunity is in servicing the small business sector in the micro SMB category, which usually has nine employees or less. “The vast majority of them fail because of cash flow concerns. So how do we provide insight and help on their cash flow concerns? Because at the end of the day, that will mean that they’re successful, and far fewer of them fail after starting.”