A new venture capital fund focused solely on financial technology companies has raised $20-million from a handful of big-name Canadian investors including FairVentures Ltd., the innovation arm of insurance and investment giant Fairfax Financial Holdings Ltd.
The Impression Ventures Fund II is among the first VC funds in Canada to focus on financial technology, or fintech, a fast-growing sector that is changing how consumers save, spend and invest online and through mobile applications.
The goal of the fund is to support early stage fintech companies coming out of the Canadian technology ecosystem.
"It matters to our Canadian ecosystem that they know there are founder-run venture funds in this country that specialize in fintech – that it's a growing sector – and that we have capital to deploy," says Christian Lassonde, managing partner with Toronto-based Impression Ventures.
"There is hope out there for you if you're a startup, that you can actually raise money."
Other investors in the new fund include senior executives from the financial services sector and mining industry, some of whom want to remain anonymous. One investor willing to go public is Mr. Lassonde's father, Franco-Nevada Corp. chairman and co-founder Pierre Lassonde, as well as mining executive Stephen Dattels.
The younger Mr. Lassonde said his fund addresses what he sees as a lack of specialty investing in Canada, and capitalizes on the growth of fintech expertise in the country.
"Where we are going to hit above our weight globally is in fintech," says the San Francisco-born, Toronto-raised Mr. Lassonde. He has been back and forth between the two cities throughout his career and started four companies with varying levels of success. His last and most successful was online gaming company Virtual Greats. He founded Impression Ventures about three years ago.
Impression Ventures has already invested in some fintech companies through its first fund, including online adviser Wealthsimple, receipt solutions provider Sensibill and on-demand parking payment company HonkMobile.
The second fund, which Mr. Lassonde says is double the size of the first, has already put money toward online real estate company Zoocasa, which offers data on house sales, prices and neighbourhood demographics. Zoocasa relaunched last year under new ownership, after being shut down by previous owner Rogers Communications Inc.
Mr. Lassonde says the fund will look to invest in Canadian-based fintech companies in the execution stage and in founders with some entrepreneurial experience. He says there may be a bias toward startups in the Greater Toronto Area if they're targeting financial services companies directly, given that's where the big players are based, but the fund will consider fintechs across Canada that are targeting consumers.
"We look for companies that are creatively disrupting the financial services sector to the benefit of end users, consumers and businesses alike," he says.
Impression Ventures II is one of the first investments for FairVentures, which launched earlier this year with the mandate to partner and invest in innovative companies and projects to support the Fairfax family of companies.
"Impression Ventures has a strong record of finding quality early stage financial technology companies," Paul Rivett, president of Fairfax, says in a statement that is scheduled to be released on Monday.
"We are very pleased to partner with Christian and his team as we continue to seek out innovative companies and technologies to support and grow the Fairfax group over the long term."
Fairfax is among a growing number of financial services giants investing money in fintechs. For example, Power Financial Corp. is a major investor in mobile bank Koho, Wealthsimple and online lender Borrowell. The big banks are also developing their own technology hubs and partnering with fintech firms to stay on top of the trend.
"We're seeing a lot more bigger names getting into venture," Mike Woollatt, chief executive officer of the Canadian Venture Capital & Private Equity Association. "It shows the health of the industry and the growth."
Mr. Woollatt says these investors benefit from access to intellectual property in the fintech space and access to top talent, as well as potential returns in the long run.
"They're sitting on the edge of an industry that's expanding at an incredible pace," he says.
Another VC fund in Canada that invests heavily in fintech is Information Venture Partners, founded in 2014 as a spin-out of RBC Ventures, the venture capital affiliate of Royal Bank of Canada. The fund's mandate goes beyond fintech to include other technology startups.
Another fintech-focused VC is Montreal-based Ferst Capital Partners, founded by brothers and managing partners Jay and Dominique Ferst, who provide early stage VC capital to Canadian startups.