Wave raises $6.7 million from BDC Capital as it works to enter the lending space

wave

BDC Capital has invested $6.7 million in Toronto-based Wave, bringing Wave’s total funding for its series C to $22.1 million.

Wave co-founder and CEO Kirk Simpson said that the majority of the funding will be used on rebuilding their core invoicing and accounting features to continue to make them faster and easy to use, as well as expanding its FinTech payroll and payments aspect. Wave is also looking to enter a new frontier — the lending space. Simpson said that in the next six to 12 months, the company will roll out new features centred around money movement, which he said has been a large part of Wave’s growth.

“What we’re trying to do is build a tool that a small business can use to replace pen and paper and pay more efficiently. We’ve learned a lot over the past few years.”

“We’re already coming close to having moved about $1 billion of our customer’s money through payments and payroll so our users are trusting us with those types of money movement projects and we know that with small businesses one of the biggest pain points is getting access to capital,” said Simpson. “We think we’re well-positioned based on the relationships we have with our customers and the amounts of data we have on their business to be able to make smart lending choices for those businesses. At a very top level thats how we’re thinking about implementing it.”

Over the next six months, Wave is running experiments with partners to figure out the best way to implement their lending strategy.

As 98 percent of small businesses in Canada have one to 99 employees, making processes easier for the business owner is clearly a lucrative market; Simpson said that overall in North America small businesses have less than nine employees, and as many as 60 percent of these small businesses still use spreadsheets, word documents, and shoeboxes as typical accounting software targeting this market is still too complex.

“What we’re trying to do is build a tool that a small business can use to replace pen and paper and pay more efficiently. We’ve just learned a lot over the past few years and we’re signing up 55,000 businesses a month now, and we know so much of our business owner’s needs,” said Simpson. “Their requirements are changing a bit, they have desire to go more mobile, bank feeds of data instead of manual entry has become the norm, so needs are changing a bit but core fundamentals remain the same, we just have a better understanding about what drives their usage patterns.”

The latest funding came from BDC Capital’s $150 million IT Venture Fund II, a fund dedicated completely to companies in the mobile, Internet, enterprise, cloud solutions, and FinTech sectors.

With this participation, BDC Capital gains a seat on the company board, which will be occupied by Peter Misek, BDC Capital IT Venture Fund’s newly appointed partner in Toronto. Misek managed the investment. Other institutions that have participated in the Series C funding include, CRV, The Social+Capital Partnership, OMERS Ventures, and an unnamed strategic investor working in FinTech. Wave will use the Series C funding for the ongoing innovation and development of its suite of tools.

“Wave is looking to solve a key pain point of small business owners by providing a real time view ­– in a single place – of their company’s financial data,” said Misek. “Wave has a strong leadership team, has been steadily increasing its number of monthly active users and has solid plans for growth in a sizeable market. Innovation in financial services is the company’s next focus. No small business wants to go into a branch for a loan or payments. Wave allows entrepreneurs to focus on running their business by offering them more convenient payment and lending solutions.”