Wealthsimple has raised a $750 million CAD financing round as the FinTech company looks to expand its market position and continue to build out its product suite.
The Toronto-based startup announced the deal Monday morning, claiming it brings Wealthsimple’s post-money valuation to $5 billion CAD.
Wealthsimple plans to use the new capital to expand its market position, build out its product suite, and grow its team.
The round was co-led by venture capital firms Meritech and Greylock. The deal also included participation from DST Global, Sagard, Iconiq, Dragoneer, TCV, Inovia, Allianz X, Base 10, Redpoint, STEADFAST, Alkeon, TSV, Plus Capital and others. A number of Canadian celebrities also invested, including Drake, Michael J. Fox, Ryan Reynolds, Kelly Olynyk, Dwight Powell, and Patrick Marleau. The transaction is expected to close by mid-May.
The fundraising consists of a $250 million in primary capital and a $500 million secondary offering to the PCC Group, which consists of Power Corp, IGM Financial, and Great-West Lifeco. While the round decreases Power’s interest in Wealthsimple, the PCC Group will continue to be the largest shareholder in Wealthsimple with a combined 43 percent equity interest and 60 percent of the voting rights. Prior to this latest round, Power held a 61 percent equity interest in Wealthsimple.
According to Power, it will retain an interest in Wealthsimple valued at $2.1 billion. This represents a total increase in value of $2.3 billion over the PCC Group’s invested capital of $315 million in Wealthsimple, representing an 8.3 times increase and a compound annual return on investment of 79 percent.
As first reported by The Globe and Mail, and confirmed to BetaKit Monday morning, the round includes some of Silicon Valley’s leading venture funds. In the company statement, Wealthsimple noted Meritech and Greylock’s experience supporting growth-stage and helping take companies public. The last time Meritech and Greylock co-led a funding round was the Facebook Series B financing in 2006.
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In a blog post, Wealthsimple co-founder and CEO Michael Katchen called the investment a “resounding vote of confidence,” writing that the new capital will help the company “revolutionize the way we do money, and become the biggest consumer finance company in Canada in the process.” To accomplish this, Wealthsimple plans to use some of the fresh funding to grow its team.
“I think the status quo in Canada has been put on notice,” wrote Katchen, who added that Wealthsimple plans to use the investment to give Canadians more financial products and more efficient ways to grow and manage their money. According to Wealthsimple, over two million Canadians currently use the company’s products.
As part of the deal, Meritech general partner Max Motschwiller is joining Wealthsimple’s board of directors.
The sizeable raise comes just over half a year after Wealthsimple secured $114 million CAD in equity financing, giving the company unicorn status, with a valuation of $1.4 billion.
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Over the last couple of years, Wealthsimple has been expanding its online financial products into new verticals, including crypto assets as well as saving and spending. In March, Wealthsimple sold its United States book of business to Betterment, citing plans to focus more on the Canadian market.
According to Wealthsimple, it is experiencing its biggest period of growth to date since the company was founded in 2014. Wealthsimple Trade, its commission-free stock trading platform, has reportedly experienced “rapid growth” in the past 14 months. Its popularity soared amid the Reddit-fuelled trading frenzy, with Wealthsimple reporting more than 1.5 million people using its products in March.
With support from Josh Scott.