Wealthsimple has sold its United States (US) book of business to online financial services company Betterment. The Toronto-based FinTech startup cited the impetus behind the decision as a desire to focus more on the Canadian market.
Wealthsimple is set to transfer all of its existing US-based customer accounts to Betterment by June. Following the transfer, Wealthsimple will no longer support US accounts. The deal does not include the purchase of any technology, employees, or operations; Betterment is solely purchasing Wealthsimple’s US book of business (customers and accounts). The financial terms of the deal were not disclosed.
Betterment is a Wealthsimple counterpart in the US that also offers automated financial services including in the spending, saving, investing, and retirement spaces. When reached for comment Wealthsimple referred BetaKit to the press release and declined to comment on multiple questions, including if the decision was prompted by increased competition in the US market.
Wealthsimple co-founder and CEO Michael Katchen noted his company sold the US side of its business in order to focus more on Canada. The FinTech company, which provides automated wealth-management services, has notably been expanding its financial offerings of late into such areas as savings and spending, crypto assets, most recently launching Wealthsimple Cash, allowing for peer-to-peer payments.
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Even while expanding its consumer offerings in Canada, the Toronto-based company has been honing its focus over the last year. In January 2020, Wealthsimple sold its business-to-business division to Purpose Advisor Solutions. In late 2019, Katchen told BetaKit Wealthsimple was at “a pivotal stage” in its business, with “a very real, very unique, once-in-a-generation opportunity to transform financial services for Canadians.”
Wealthsimple has been gaining traction in the Canadian market. Amid the GameStop trading frenzy in January, Wealthsimple’s trading platform reached number one overall on the Canadian Apple App Store after beginning the new year ranked 39. The company also saw a 50 percent increase in sign-ups and doubled trading volume. According to The Globe and Mail, Wealthsimple accounted for 43 percent of new trading accounts opened in January, more than any other Canadian brokerage.
The company’s growth is backed by $114 million CAD in equity financing, which it raised last fall. The round was led by growth equity investor TCV and brought Wealthsimple’s valuation to a reported $1.4 billion CAD.