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As Fintech Valuations Fall, Portage closes US$655M VC Fund

Bloomberg | Kevin Orland | Jun 21, 2022

Fintech funding - As Fintech Valuations Fall, Portage closes US$655M VC FundPortage Ventures, the venture-capital firm owned by Power Corp. of Canada, closed a US$655 million fund to seek a new batch of financial-technology investments around the world and take advantage of a recent tumble in valuations.

The firm’s third fund, Portage III, raised money from 34 institutional investors from nine countries, with about half of the backers new to the firm, Portage said Thursday. The fund is almost twice the size of the firm’s US$335 million second fund.

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Portage -- an early funder of Canadian online financial-services firm Wealthsimple -- sees more room for fintechs to grow as large firms accelerate their tech investments, work to expand digital banking and improve their customer experiences, said Adam Felesky, Portage’s co-founder and chief executive officer. The recent decline in fintech valuations -- underscored by Stripe Inc.’s 27 per cent internal valuation cut and Klarna Bank AB’s 85 per cent reduction -- only makes the investment possibilities more attractive, he said.

Adam Felesky, Co-Founder and CEO, Portage:

With the secular tailwinds in fintech, we thought it was a great time to be in fintech over the last few years.  With this correction in valuations, it’s an even greater opportunity. Startups with more efficient, less capital-intensive business models are now in favor, while larger, consumer-focused firms that have to spend a lot on customer acquisition are more challenging.

Portage is owned by Sagard, the alternative-asset-management arm of the Desmarais family’s Power Corp. financial conglomerate.

That ownership structure informs Portage’s investment process, which includes seeking out startups that can partner with Power Corp. companies or other backers of its funds. Investors in Portage’s previous funds have struck almost 60 partnerships with portfolio companies. About half of Portage III’s investors are financial firms using the fund partly as a way to learn about industry trends or eventually strike deals with firms that Portage invests in.

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Stephanie Choo, Partner, Portage:

Portage III will focus on investments in wealth and asset management, banking, insurance and payments.  Some of those applications may be in debt collection, debt resolution, cyber insurance and embedded payments, she said. While Portage doesn’t directly invest in cryptocurrencies, it would consider companies that use blockchain technology, particularly as a payment rail.  It’s very difficult to ignore the transformative and potentially disruptive power of Web3 and crypto to segments we invest in.

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NCFA Jan 2018 resize - As Fintech Valuations Fall, Portage closes US$655M VC FundThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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