Executives from Canadian FinTech, CLA, Financeit, LendCare and others plan to back early-stage FinTech startups with a $20 million fund.
A family duo of Canadian financial services insiders have teamed up with a group of successful founders to launch a new venture capital (VC) firm focused on fintech. Leaving North Ventures.
Founded and led by Canadian Financial Technology BulletinThey are Tal Schwartz and his father, Canadian Lenders Association (CLA), Gary Schwartz, founder of Toronto-based Exit North, is raising a CA$20 million fund to support early-stage FinTech startups across Canada.
Last year, Tal and Gary Schwartz decided to create a fund around Canadian fintech entrepreneurs with exits under their belt. Since then, the father-son duo has raised more than $5 million from LP founders, recruited some to help vet and advise startups, and invested in six nascent FinTech companies.
Once Exit North began targeting defunct Canadian FinTech founders as LPs, “everything clicked,” said GP Tal Schwartz.
“The name Exit North really reflects the makeup of the people involved,” Tal Schwartz, general partner (GP) of Exit North, told BetaKit in an interview.
In addition to his venture partner father, who previously created and sold his own technology company, Impact Mobile, focused on mobile messaging, Exit North’s investors include five other Canadian FinTech founders who have exited the market as risk partners.
The group includes Finance co-founder and executive chairman Michael Garrity, Paradigm Quest co-founder Katherine Gregory, Beanworks co-founder Catherine Dahl, GiveCare co-founder Ali Metel and Savvyy co-founder Norm Cappell. Tal Schwartz declined to disclose Exit North’s limited partners (LPs), but said they were made up largely of other high-net-worth individuals with similar profiles and financial services expertise, as well as family offices and institutions.
Once Exit North began targeting defunct Canadian FinTech founders as LPs, “everything clicked,” Tal Schwartz said. The GP noted that the firm’s initial target was $5 million, a level the fund “pretty quickly exceeded” when it first closed a year ago, leading Exit North to aim for more high. He declined to disclose the exact amount Exit North has raised so far, but said he expects the company to hit its new $20 million goal “imminently,” despite particularly hard Venture capital fundraising requirements.
Exit North plans to invest between $250,000 and $1 million in Canadian FinTech startups at the pre-seed and seed stages, focusing on business-to-business technology in areas such as capital markets, insurance, loans, payments, cash flow and wealth, as it grows. a portfolio of 30 companies.
The venture capital firm has made six investments to date, backing startups like the Toronto-based private lending software company. ReferenceCalgary-based broadcast tracking platform Arbor, Vancouver spend management for ad agency startups Opal, Vancouver-based law firm operating systems provider Walter and two other companies Undisclosed Canadian FinTech. According to Exit North, most of its portfolio companies have engaged one of its partners as an advisor.
Tal Schwartz previously spent five years as head of policy and research at CLA, and nearly three years as product manager at Nomis Solutions, a banking infrastructure technology company based in San Francisco. Before launching Exit North, he made several angel investments, backing Canadian FinTech startups like NetNow and Bree.
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In 2022, Tal Schwartz created the weekly Canadian Fintech newsletter, where he tracks funding, product and acquisition news from Canadian FinTech startups, and uncovers and analyzes broader trends in lending, payments, banking and insurance in Canada. Today, the Canadian Fintech has more than 11,000 subscribers.
Through this work, Tal Schwartz developed a significant network in the FinTech space, which he leveraged to find potential deals for Exit North. The venture capital firm’s six-person investment committee ultimately decides whether to invest. It includes Tal and Gary Schwartz, Garrity, Gregory, Dahl and Metel, and draws on the expertise of its FinTech founding members.
“Those two things together, I think, are going to make us a great VC,” Garrity told BetaKit in an interview.
Last year saw a decline in venture capital investments and transactions in the Canadian FinTech sector, but Tal Schwartz is not concerned. When asked why they decided to launch Exit North now, he replied: “I don’t think there’s ever been a better time to start a FinTech fund in Canada. »
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“The economy is rebounding, rates are falling precipitously, (and) we’re just starting to get clearer regulation, which means our portfolio companies will eventually be able to take advantage of things like open banking and online payments. real time,” the GP added, noting that the emergence of artificial intelligence has also made launching startups less expensive.
Tal Schwartz described Garrity, who founded and led Toronto-based financing provider Financeit, as an “amazing example” of someone who built, grew and sold a leading FinTech business. Goldman Sachs acquired a majority stake in Financeit in 2017 for an undisclosed amount, before sale to Wafra Capital Partners in 2022, would have for more than 350 million dollars.
Garrity described the makeup of Exit North’s LP and venture partners as unique. He said the fund is “made up of Canadians who have been there, done that, and made money at scale for their shareholders” (in fintech) and are willing to put their own capital and expertise to profit. He started as an LP before becoming a venture partner after identifying an opportunity to give back and generate a strong financial return.
“We are focused on an exit,” Garrity added. “That’s why it’s called Exit North – it’s not Valuation North… Our goal is to help businesses become sustainable businesses that are worth something and achieve what they’re worth.”
In the early days of Financeit, Garrity said the support he received from others with a track record of starting and selling businesses was key, noting that these people helped Financeit raise money, find clients, build trust with lenders and refine your story. As a fledgling FinTech entrepreneur, he argued that it’s essential to have connected and experienced mentors on your side, something he hopes to provide with Gregory, Dahl, Metel and Gary Schwartz.
Gary Schwartz has built his own FinTech network through his work as founder, president and CEO of CLA, which represents innovative lenders and currently has over 300 members. He has also individually invested in a large number of Canadian technology companies to date, including domestic FinTech startups like Paays, Lenders API, Padder and Yield Exchange.
“Our goal is to get out. That’s why it’s called Exit North – it’s not called Valuation North.
Michael Garrity, North Exit
As he forges his way as a FinTech writer-turned-investor, Tal Schwartz views the network and access to FinTech founders he’s developed as assets that will serve him well. “Business is a people industry,” he added.
Tal Schwartz argued that there is an overlap between the skills he and his father used to create Canadian Fintech and CLA and those required in venture capital.
“The transition from being a community platform organizer to where we are now – where we’re investing in a lot of these early-stage founders – was incredibly natural,” he said.
Moving forward, Tal Schwartz plans to continue writing about Canadian Fintech, noting that he sees it as a tremendous source of deal flow and a way to build Exit North’s brand and reputation.
“I believe Tal Schwartz’s unprecedented access to dealflow in this sector is a crucial part of what will make this project successful,” added Garrity.
Featured image courtesy of Exit North Ventures.