Wealthsimple raises $114 million in latest round as valuation hits $1.4 billion

TORONTO — Online investment firm Wealthsimple Technologies Inc. has reached unicorn status after raising $114 million from a group of investors led by U.S. venture capital firm TCV.

The deal announced Wednesday values the Toronto-based company at $1.4 billion and hands an ownership interest of 7.5 per cent on a fully diluted basis to TCV, Greylock Partners, Meritech Capital, Allianz X and Two Sigma Ventures.

article continues below

"There's still so much room to grow, and to have investors of this calibre join us is an incredible vote of confidence in both our mission and our ability to deliver on it," Mike Katchen, Wealthsimple's chief executive, said in a statement after his company passed the $1-billion valuation needed for a privately held start-up to be considered a unicorn.

Katchen founded the company which offers commission-free stock trading, savings accounts and tax filing software in 2014. It targeted young investors with easy to understand personal finance explainers and flashy Super Bowl ads.

The company has also began offering customers the chance to buy and sell Bitcoin and Ethereum with a new product it called Wealthsimple Crypto.

According to Katchen, the new cash will help Wealthsimple improve its market position, build on its product offerings and expand its team in Canada.

Until the investment Wednesday, Power Corp. of Canada, IGM Financial Inc. and Great-West Lifeco Inc. owned a 70.1 per cent controlling interest in Wealthsimple. Just over 26.2 per cent of that belonged to Power Corp.

The deal lessens these companies' control over Wealthsimple, now giving them a 61.7 per cent ownership interest on a fully diluted basis. Power Corp's interest has fallen to 23.1 per cent.

Wealthsimple is adding David Yuan, general partner at TCV, to its board of directors.

Yuan said in a statement that he was thrilled to get to work with Wealthsimple.

"We have been watching Wealthsimple's rise in the Canadian market and love the way the company is bringing simplicity, humanity, and delight to personal finance," he said.

The Wealthsimple deal is just Yuan and TCV's latest in their quest to invest in tech-focused companies with the potential to become market leaders.

TCV has already thrown its capital behind Airbnb, Facebook, Netflix, Peloton and Spotify.

Fellow Wealthsimple investor Greylock has meanwhile focused on enterprise and consumer software and has backed tech goliaths including LinkedIn and Airbnb.

Meritech has partnered with more than 200 companies including Salesforce, but this is the first time it has made an investment in the Canadian market.

The number of unicorns in Canada pales in comparison to the U.S. and Asia, but the country has seen an uptick in the number of companies reaching the coveted status in recent years.

Among Canada's unicorns are Coveo, a Quebec City-based enterprise software company; Nuvei, a Montreal payments brand that recently made history when it landed the Toronto Stock Exchange's largest tech sector initial public offering; and ApplyBoard, a Kitchener, Ont.-based education software company.

This report by The Canadian Press was first published Oct. 14, 2020.

Companies in this story: (TSX:POW, TSX:GWO)

Read Related Topics

© Copyright Times Colonist

Most Popular