By Laura Lenz, Dave Wechlser and Ryan Zauk
The funny thing with investors is that we can have a hard time articulating what we look for in a company – because the greatest opportunities will break our own rules. It’s a game of outliers and exceptions. The one thing most investors agree on is the feeling you get when you meet a founder that has that rare, electric combination of passion, ambition, obsession, and capability to deliver an extraordinary product. They challenge your world view and make you revisit all of your underlying assumptions.
It’s always exciting to meet that founder, and even more so when they’re on your doorstep in Canada. And it is extra special when that founder is building a business to help Canadian businesses grow faster and be competitive on a global stage.
That’s how we felt when we first met Rob Khazzam, co-founder of Float, and his team in the early days of Float. And over the course of getting to know the team and business better, our conviction got stronger and stronger. When Rob approached us for his latest fundraise, we knew it was time.
This week, Float announced a $70M Series B fundraise led by Growth Equity at Goldman Sachs Alternatives with participation from us, FJ Labs, Garage Capital and Teralys. We are privileged to back what we believe is another great Canadian success story.
Why a Canadian-specific business product?
At first glance, the idea of a fintech business built for Canadian SMBs might sound niche. I mean, there are plenty of US fintechs – surely, they can tackle the Canadian market, too? Well, history suggests otherwise.
According to the World Economic Forum, Canada boasts one of the most stable banking environments globally. Historically, Canadian banks have demonstrated stability and resilience, with no bank failures during the Global Financial Crisis (GFC) and a remarkably stable record compared to the U.S., which saw over 560 bank failures post-GFC. However, this stability comes at the cost of high barriers to entry, with only 35 banking licenses issued in Canada compared to 5,600 in the U.S.
The restrictive nature of Canada’s banking system creates a significant moat for established players (the Big 5 banks), which dominate the market through 90% deposit concentration and 80% bill pay concentration. This dynamic tends to stifle innovation that the US has seen, leaving little room for new competition and modern solutions.
With 1.35 million businesses in Canada underserved by their banks' legacy technology, there is a critical need for a modern, Canadian-based solution. Enter Float, who fills this gap with its comprehensive suite of modern financial management tools.
Float is Canada’s only all-in-one finance platform (it is not a bank, but adds a software layer on top of existing financial institutions) offering businesses enhanced financial products including a full spend management suite, corporate credit cards, and bill pay solutions. These products are unified in a sleek interface and anchored on modern technical infrastructure. With a unique position in the Canadian market, Float is poised to revolutionize how businesses manage their finances and help our businesses be more competitive globally.
The pace of product innovation at Float is beyond impressive, and its proven ability to capture market share in such a short timeframe shows the strong need for this product.
We are excited to play a small role in Float’s journey and look forward to supporting Rob, Ruslan, Griffin, and the Float team as they provide a solid foundation upon which the next generation of great Canadian businesses will build.
To learn more about Float’s product offering, visit floatfinancial.com.
