Mike Serbinis is pissed off that LEAGUE’s fundraising took nine weeks instead of eight.
There are a few reasons for that. One is that Mike Serbinis is a shark, and sharks need to keep swimming forward, or they die. The other is that Serbinis views time spent talking to investors at this stage of a company’s growth as time missed. “I always view fundraising as something you gotta do,” Serbinis told BetaKit. “It’s part of building a business.”
So LEAGUE’s founder and CEO made sure it became time well spent.
Today, the company announced the close of a $25 million USD Series A round, led by OMERS Ventures, with participation from a healthy dose of strategic and institutional investors, including Real Ventures, BDC, Infinite Potential Technologies, RBC, Manulife, and Power Financial Corporation. The total amount exceeds $32 million CAD at current exchange rates, making it notably one of the biggest Canadian Series A rounds on record, as well as about double what Serbinis told BetaKit he hoped to raise in an exclusive interview back in March.
Mike Serbinis is a shark.
He can’t stop swimming forward.
“Our original number, we thought we’d raise around 10-12 [million]; we had more than 5x the demand. And in that timeframe, the business has also evolved,” Serbinis said. “We realized through some of the conversations with investors that this is a big swing. Better to take a little more capital than we initially thought.”
Serbinis was quick to point out that while the total amount was more than initially expected, it was still on better terms compared to those of his category competitors, which he alternately described as “nuts” and “crazy.”
The round is also notable for being solely Canadian-led, with nary a U.S. investor in sight. Speaking with Serbinis, he was quick to dismiss both the need for a U.S investor for a Canadian round to carry weight, or an all-Canadian round as an act of nationalist propaganda (of which he is certainly known for). Instead, it all came down to business.
“Ultimately it comes down to money and terms,” Serbinis said. “It’s business first, and as we look at it, this one looked best for a number of business and economic reasons.”
Still, the vocal founder was willing to admit some small welling up of national pride.
“It had the byproduct of this great Canadian feeling to it – we looked at it and said, holy shit, I don’t think we could have done this here five years ago. You can do a round this size, here.”
Serbinis credited his resume as an accomplished entrepreneur for getting his foot in the door with every investor in the round, but LEAGUE’s category for driving the intense interest, which he says is currently undergoing an obvious paradigm shift.
“Universally, the model is not about the consumer first and keeping them healthy,” Serbinis said. “The model is more about provision of service and claims avoidance. And the model is almost always implemented using paper, phone, or old systems. So it’s a high-cost structure model.”
“We’re becoming something different – a layer above the stuff that frankly is becoming a commodity, that creates a whole different consumer experience.”
Serbinis argued that its layer makes LEAGUE an attractive partner for insurance companies with “antiquated systems” and no real interest in forwarding a customer experience. As LEAGUE pondered a transition out of the consumer market, Serbinis and his team found themselves in meetings where future partners were counter-pitching the company on what they should become. “It’s like everyone knew what we’re becoming before we did,” Serbinis said.
“It’s like everyone knew what we’re becoming before we did.”
The transition also made LEAGUE highly attractive to Power Financial Corp, which has been actively funding a similar movement in the Canadian FinTech space. It begs the question of whether or not Power is investing in a new vision of financial services, or driving it.
“We have quite a bit of alignment, I’d say, in our respective visions,” Serbinis laughed when I posed the question to him.
“When I first met Paul [Desmerais, Chairman and Co-Chief Executive Officer of Power Corporation and Executive Co-Chairman of Power Financial], and later his father, we were still testing out the consumer marketplace. It was one of my first conversations, with Paul Sr., when I started to get my eyes open to the idea that you start to look like a new kind of health insurance company.”
Of course, the question then becomes one of how soon until Power’s portfolio of FinTech companies start working together for a common cause (Borrowell and Wealthsimple have already dipped their toes in the water). Perhaps a Justice League of Canadian FinTech lowering the cost of acquisition through sharing customers and lessons learned in a highly regulated sector. While Serbinis said “there’s no secret Batcave” (yet), he did admit “we all know each other.”
“We’ve had that conversation. ‘They’re going to invest with you, they’re going to get their healthcare insurance through me’ so we’re all kind of playing in this space. I do think we’re more FinTech under the hood.”
Serbinis also admitted that said hypothetical partnerships could also help Canadian FinTech companies reach proper escape velocity for global expansion (take my word for it, we’ll be seeing more of this soon). For now, LEAGUE’s focus is to be almost nation-wide in Canada by this fall (one province is a regulatory stickler), with a state-specific expansion strategy in the U.S.
Mike Serbinis is a shark that can’t stop swimming forward. Which Canadian startups are going to join him on foreign shores?