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Yoonkee Sull, Greg Stanger and Vanessa Deng | May 3, 2021

Wealthsimple: Humanizing Money Management

https://www.wealthsimple.com/en-us/

We first met Mike Katchen, co-founder and CEO of Wealthsimple, in early 2018 when he and his co-founders were three years into building the company. At the time, Wealthsimple was a single-product company offering a simple and low-fee, digital-first investment management platform. They had an early lead in Canada in a fast-growing category, but the market was still nascent. Still, from the earliest days, he very clearly communicated that their goal was to become the primary money management relationship for Canadian consumers.

And while others may have pointed to other emerging financial technology companies as his core competition, Mike set his sights elsewhere. He always focused on building for the next generation and taking share from the largest and most entrenched 150+ year old financial institutions in Canada.

Ambitious and inspiring? Yes. But very hard to do. The US is a highly fragmented financial services market. The top five banks in the US have less than 40% market share and the US consumer is generally accustomed to buying products from a variety of institutions. Canada is quite a bit different. The top five banks in Canada have nearly 90% market share and have had significant success in bundling services, such as investment management, core banking and trading, creating long-term competitive moats. Stricter regulations and a less established technology ecosystem for financial infrastructure have also favored the incumbents. Structurally, it is a difficult market for new entrants to build distribution across a portfolio of products, let alone for a single product.

As a result, the team knew they had to focus on building unrivaled trust with the consumer and providing simple but personal and powerful experiences to win. With meaningful capital support from Power Financial, the team got to work and built a world-class technology platform that could grow and scale with their customers’ financial journeys. In parallel, they spent heavily in editorial content, financial advice and raising awareness, all with a common purpose — to build a unique brand that is human and relatable. At the same time, the team built methodically and worked in close partnership with regulators. They moved with intention and at a pace that would preserve the company’s values and importantly best align them with the financial interests of its customers.

Today, we believe Wealthsimple is one of the most trusted financial brands in all of Canada. It is the dominant player in low-fee investment management and has built a deep and personal relationship with more than 2M Canadians who have trusted Wealthsimple to manage their money. The company is now simplifying many other financial pain points and has already released numerous services, including Trade (commission-free stock trading), Crypto (buying and selling of cryptocurrencies), Cash (savings account and peer-to-peer money transfer) and Tax (personal tax filings). Building on its existing customer base and brand awareness, Wealthsimple has seen rapid adoption of its new products by both its existing customers and new customers and is on a strong path to building an integrated ecosystem similar to many of the most valuable consumer financial technology companies around the world.

We at ICONIQ Growth have been very active in financial technology with investments in companies such as Adyen, Chime, Hippo Insurance, Marqeta and Robinhood, among others, and are thrilled about our investment in Wealthsimple. Since our first meeting three years ago, we have been inspired by how Mike and the team have executed against their mission every step of the way.

We could not be prouder to be working with Mike, Brett, Rudy and the rest of the team at Wealthsimple. Together we look forward to supporting the company’s vision to become a globally recognized consumer brand and the market-leading and most human financial platform for Canadians.