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New Unicorn Wealthsimple Plans Insurance, Mortgage Products Buildout Before IPO

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Having just hit a $1 billion valuation, the top executive of Wealthsimple Inc. said the company still has a lot of work to do before pursuing an initial public offering.

The online investment firm, which on Wednesday announced a new funding round raising AU$114 million (US$87 million), plans to use the funds to generate cash, checks, insurance insurance and mortgage products will allow them to become its users,’ the main financial institution, Michael Katchen said.

Without that kind of expansion, Wealthsimple would “remain only a small part of what our clients need to manage their full financial relationship,” says Katchen. This Toronto-based company has approximately C$8.4 billion in assets under management and 1.5 million users.

The funding round that attracted new investors in Silicon Valley was led by Technology Crossover Ventures, known as TCV. Other investors include Greylock Partners, Meritech Capital Partners, Two Sigma Ventures and the venture capital arm of German insurance giant Allianz SE. Companies owned by Power Corp. Canadian-controlled companies, including top holder IGM Financial Inc., will see their shares fall from 70% to about 62%.

Katchen, 32, said in an interview: “Publicity is a huge process and entails various costs to the business and distractions to the business, and that is not the case. something we really want to worry about right now,” said Katchen, 32.

Fast development

Online investment platforms like Wealthsimple are in the spotlight. Covid-19 has benefited a number of businesses where new users don’t have to venture into the physical environment and volatile markets caused by the pandemic have spawned a generation of home-based traders. new on apps like Robinhood.

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Trends have helped Wealthsimple grow rapidly: Katchen says the company accounted for 18% of new brokerage accounts in Canada in the first half of the year.

But the frenzied market environment challenged the company’s “Get Rich Slowly” motto.

Some users of Wealthsimple would like to see it follow Robinhood’s lead and introduce riskier products like options trading and margin accounts, Katchen said. While he won’t rule those out in the long term, he has no plans to introduce them anytime soon. Instead, the company hopes to motivate clients to engage in investment strategies that are more aligned with long-term financial health.

David Yuan, a general partner at TCV who is on the Wealthsimple board, said: “Robinhood has done a great job of building the game mechanics around trading while Wealthsimple’s ethos is to create wealth over time. “The pandemic has been a headwind for business.”

Katchen said Wealthsimple’s relationship with Power Corp is as strong as ever, and the funding round has proven it is flexible in allowing new owners to join the company. He also said he sees a long road ahead for him in the company.

“I can’t imagine being anywhere else for a very long time,” he said.

Pictured: Mike Katchen, chief executive officer of Wealthsimple Inc., speaking during an interview in Toronto, Ontario, Canada, on Wednesday, August 14, 2019. Over five years, Wealthsimple has attracted 150,000 guests stores in Canada, the US and the UK, and currently manages more than 4.5 billion Canadian dollars ($3.4 billion).

Copyright 2022 Bloomberg.

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