Toronto small business accounting and financial tools software provider Wave has attracted a $6.7 million investment from BDC Capital, via BDC’s month-old $150 million IT Venture Fund II, contributing to Wave’s Series C round which now stands at $22.1 million, with participation from Menlo Park’s CRV, The Social+Capital Partnership, OMERS Ventures and an unnamed strategic investor in the fintech sector.
The IT Venture Fund II was allocated from proceeds of previous IT Venture Fund investments and other earnings from BDC Capital and its parent corporation, the Business Development Bank of Canada (BDC).
On the announcement of its creation, the IT Venture Fund II had already made 11 investments, in companies like Waterloo’s Axonify, Vancouver’s Cymax, and Montreal’s Hopper.
Founded in November 2010, Wave’s small businesses accounting, payments (credit card processing), invoicing, payroll financial software now tracks $80 billion in small business income and spending.
“BDC Capital’s participation will have a big impact on Wave,” says CEO and co-founder Kirk Simpson. “More than money, BDC Capital brings to the table valuable expertise and connections in the lending and payments sectors, which are key parts of Wave’s short-term development plans.”
Wave’s accounting software is aimed primarily at the small-to-medium enterprise market, which is vast given that over 30 million businesses in North America, representing 95% of all businesses, have fewer than 10 employees but nonetheless have accounting needs which aren’t being served by accounting solutions priced out of their range.
Focusing on mature startups concentrated in the mobile, Internet, enterprise, cloud solutions and financial tech sectors that have a product in market and are already generating revenue, BDC Capital’s IT Venture Fund II hopes to help build a new generation of global Canadian IT market leaders by addressing the mid-stage “capital crunch” faced by many growing Canadian software companies.
Last May, Wave raised a $10 million Series C round of funding via Menlo Park’s Charles River Ventures, Social+Capital Partnership and an unnamed strategic investor in the financial tech software space, as well as from longtime contributor OMERS Ventures.
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OMERS Ventures participated in Wave’s initial $1.5 million seed round in June 2011, just as Wave was graduating from the MaRS Discovery District’s innovation centre, followed by a $5 million Series A round in October 2011, and then a $12 million Series B round in May 2012.
“Wave is looking to solve a key pain point of small business owners by providing a real time view – in a single place – of their company’s financial data,” says BDC Capital IT Venture Fund’s newly appointed partner, who managed the deal, Peter Misek. “Wave has a strong leadership team, has been steadily increasing its number of monthly active users and has solid plans for growth in a sizeable market. Innovation in financial services is the company’s next focus. No small business wants to go into a branch for a loan or payments. Wave allows entrepreneurs to focus on running their business by offering them more convenient payment and lending solutions.”
Misek, representing BDC Capital, will now take a seat on Wave’s board.
Speaking at the second annual Cantech Investment Conference in Toronto in 2015, Wave co-founder and Chief Product Officer James Lochrie talked about the confidence boost the company’s long-term association with OMERS has brought them.
“Now when we’re talked about,” said Lochrie, “we’re talked about in the same conversations as you would hear about Intuit or Sage or Zero, multi-billion dollar public companies. We’re in the same lineup as them, simply because we built that brand and built that trust, and we’re accepted in the industry because of that.”