Float Financial Raises $48.5 Million in Series B to Dominate Canadian Market
Float Financial's Ambitious Funding
Float Financial, a promising startup specializing in expense management and corporate cards exclusively for the Canadian market, has successfully secured a substantial $48.5 million in a Series B funding round. This development marks a significant milestone for the Toronto-based company as it seeks to position itself as a leading player in the fintech sector, akin to U.S.-based giants like Brex and Ramp.
Focusing on Canadian SMBs
Float Financial differentiates itself by concentrating solely on Canadian small and medium-sized businesses (SMBs), which CEO and co-founder Rob Khazzam describes as often being "overlooked due to Canada's banking monopoly and tough economic climate." This strategic focus was a key factor in attracting investors.
Investment Led by Major Players
The funding round was led by Goldman Sachs Growth Equity, with significant participation from OMERS Ventures, FJ Labs, Teralys, and existing investor Garage Capital. This latest financial infusion pushes Float Financial's total venture funding to $92.6 million since its inception in 2020. Additionally, the company raised a $36.9 million credit facility in early 2024 to extend credit offerings to its customers.
Growth and Development Plans
While the company refrained from disclosing its current valuation, it confirmed that the Series B represented an "up round" from its previous $30 million Series A financing led by Tiger Global in November 2021. CEO Khazzam revealed that revenue figures have increased "50x," with total payment volume expanding 45x since their Series A. Assets under management have also grown by 30x, though the company has yet to achieve profitability.
Expanding Product Offerings
Since launching its first product in May 2021, Float has expanded from corporate cards and expense management to offering bill pay, high-yield accounts, accounts payable automation, and virtual physical cards in both Canadian and U.S. dollars. The company has amassed around 4,000 customers, including Jane Software, LumiQ, and Knix.
Canadian Market Confidence
In response to skepticism about investing in Canadian businesses, Khazzam asserted, "The landscape of Canadian SMBs is rich and diverse and chock full of potential." He emphasized that meeting the needs of these businesses necessitates a "distinctly Canadian approach" and aligning the financial system with the ambition of local enterprises.
Future Directions and Expertise
With the new funds, Float plans to enhance its product offerings further and expand its regional presence within Canada, as well as continue recruitment efforts. Laura Lenz, a partner at OMERS Ventures, praised Float's "ability to work within the Canadian regulatory framework and... understand the nuances of this market" as vital to its ongoing success. She emphasized the need for banking infrastructure to help Canadian businesses maintain competitiveness globally.
Lenz stated, "It takes someone intimately familiar with these nuances to be able to create a product that works," highlighting the importance of understanding local market dynamics.