Karsten Wenzlaff, Advisor
August 26th, 2025
August 13, 2026 | NCFA Insight | Artificial Intelligence And Data, Competition And Market Structure, Public Sector Policy And Industrial Strategy

On August 10, 2026, Meta published The Future Is For Everyone, Mark Zuckerberg's wide sweeping proposal for how superintelligence should fit into society.
The central idea is personal empowerment. Zuckerberg argues that advanced AI should give individuals more ability to create, learn, build businesses, improve their health and pursue their own goals rather than placing most of that intelligence under the control of governments, large institutions or a handful of AI companies.
Meta's vision imagines personal agents working continuously on a user's behalf, small teams building companies that once required much larger organizations, personalized tutors, faster scientific discovery and powerful creative tools available to billions of people.
Meta wants AI capability spread widely, while the compute, models, release decisions and government relationships needed to provide it remain concentrated among a handful of organizations.
Mark Zuckerberg, Founder and CEO, Meta:
“The defining questions of our age are who will have access to superintelligence and what will we direct it towards.”
One of Zuckerberg's strongest economic arguments is that AI's biggest contribution could come from helping people invent things rather than simply automating today's jobs.
Meta expects individuals to become capable of doing work that currently requires larger teams, more capital or specialized expertise. Zuckerberg predicts more small businesses, more experimentation and potentially more employment as people use AI to create products, services and jobs that don't exist today.
That is a different vision from a future where AI mainly replaces knowledge work. Meta argues that if personal agents increase people's capabilities quickly enough, workers can adapt and new demand can grow alongside automation.
For founders, that could change the economics of starting a company. Product development, research, design, marketing and operations could require fewer people and less initial capital. Small firms could reach meaningful scale much earlier.
Financial services will feel the same pressure. Meta already has AI that can plan work, connect with email and calendars and continue tasks after the user leaves. As agents gain access to financial information and connected services, permissions and accountability become part of the operating model, especially when an agent can act rather than simply advise.
The more unusual part of Zuckerberg's argument is about safety.
He rejects the idea that one centrally controlled superintelligence can be aligned to a single set of values that works for everyone. People disagree about politics, economics, culture and what makes a good life.
Meta's answer is to distribute powerful AI widely enough that people, businesses, governments and competing AI systems check one another.
It is essentially a balance of power argument. One person with vastly better legal, financial or cybersecurity intelligence could gain an enormous advantage. If many people have access to comparable capabilities, Meta argues that power becomes harder to monopolize. (There’s some irony here. Zuckerberg built his fortune by controlling access to data, distribution and network effects that others couldn’t easily replicate.)
That philosophy also influences Meta's approach to alignment. Personal agents should primarily help users pursue their own goals within legal and safety boundaries rather than enforce one company's view of what those goals should be.
Meta says it plans to build a private mode where even Meta can't access a user's information, and it intends to resume releasing some open models. It is also giving its independent board authority to approve safety criteria for model releases rather than leaving those decisions entirely with Zuckerberg or management.
Meta's existing algorithmic products are already under legal scrutiny, including a federal trial involving 29 U.S. states over alleged harm to children. Meta denies the allegations. A company asking people to trust far more capable personal agents will have to show that user empowerment, privacy and safety work in practice. Algorithmic accountability is already moving into the courts as AI and automated systems take on a larger role in people's lives.
Zuckerberg's decentralization argument has limits.
He wants individuals to have broad access to powerful AI, but he also argues that the United States and its allies should retain leadership in advanced models, silicon and infrastructure. Meta supports continued restrictions on exports of leading chips to geopolitical rivals and wants U.S. policy to make it easier to build data centres and energy capacity.
He also proposes closer cooperation between frontier AI labs and government. Rather than waiting until an advanced model is finished, Meta wants labs to share intermediate model checkpoints and technical staff so governments can identify cybersecurity and other security risks earlier.
The result still leaves considerable power with governments, frontier labs and the companies that control advanced compute. Individuals would gain far more capability. Governments would receive earlier access for security purposes. Independent boards would get more authority over release standards. Frontier labs would still control development of the most capable models.
Meta's vision is therefore decentralized at the user level while retaining substantial institutional coordination at the frontier.
Meta expects capital spending of US$130 billion to US$145 billion in 2026 and spent US$31.08 billion in the second quarter alone. It is investing in models, data centres, energy, networking, its own chips and outside accelerators while trying to deliver AI across products already used by billions of people.
If personal superintelligence is going to be free or affordable at global scale, someone still has to pay for the compute..
Meta wants superintelligence broadly distributed, but scarce compute still has to be allocated. Its answer is a dynamic auction for additional capacity, which means the vision of AI for everyone could still produce tiers of access based partly on what users can afford. (conflict?)
The business model hasn't been proven. Meta's second quarter free cash flow fell to US$784 million as infrastructure spending accelerated, even while its core advertising business remained highly profitable.
Meta is making these commitments under real pressure. Its infrastructure spending has climbed rapidly, the company is still building the compute capacity and custom chips needed to compete at the frontier, and its existing platforms face growing legal scrutiny.
The scale of the investment also reinforces a central tension in Zuckerberg's vision. Meta wants personal AI to give individuals more power, but only a small number of companies can currently finance the systems needed to provide it.
Meta's vision has clear upside for Canada.
Canadian entrepreneurs, researchers and smaller businesses could gain access to capabilities they would never be able to finance themselves. If AI lowers the cost of creating companies, learning new skills and developing new products, a smaller economy can participate without matching U.S. frontier model spending dollar for dollar.
Canada is already debating how to keep more domestic intellectual property, capital and compute capacity while using global AI platforms. The country's AI sovereignty debate is partly about preserving enough domestic capability to avoid becoming only a customer of technology developed and controlled elsewhere.
A recent pro-human AI initiative backed by researchers, business and labour groups also argues for human agency, limits on concentrated power and accountability for AI companies. Zuckerberg reaches some similar principles from a very different starting point.
Canada needs enough choice, competition, data control and domestic capability for its companies and citizens to use increasingly powerful AI on their own terms.
Zuckerberg's bet is that superintelligence can give individuals more power to learn, invent, work and build. Meta has the reach and financial capacity to put that idea in front of billions of people. The cost of doing so is already putting heavy pressure on cash flow.Whether users ultimately gain more control will depend on who controls the models, data, compute and rules behind their personal AI.
The 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, artificial intelligence, 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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August 10, 2026 | NCFA Insight | Regulation And Policy, Competition And Market Structure, Public Sector Policy And Industrial Strategy

On August 10, 2026, ClearScore, Modulr, Teya, Urban Jungle and Zilch became the first firms regulated solely by the UK's Financial Conduct Authority to join its Scale-up Unit. These aren't startups testing whether a product works. They already operate across credit, payments, SME finance and insurance, and several are adding products, distribution channels or new markets. The FCA wants closer contact during that stage of growth, when regulatory questions and operational complexity can multiply quickly.
The Scale-up Unit gives participating firms a dedicated regulatory contact. It can help:
The FCA also wants feedback when its own policies or supervisory processes create unintended barriers to growth or competition. That makes the programme a two-way channel where companies get earlier regulatory access, while the FCA gets evidence from companies dealing with expansion in real time.
The unit sits alongside Innovation Pathways, the Pre-Application Support Service and Early and High Growth Oversight, giving the FCA several points of contact from early product development through commercial scale. Its innovation services have supported more than 1,000 firms.
The FCA's 2026 innovation framework already connects sandboxes, regulatory guidance, AI testing and growth support.
The Scale-up Unit fills more of the space after authorization, when successful firms start becoming harder to supervise and harder to change.
ClearScore reported £144.7 million in 2025 revenue, up 37%, and more than 25 million users globally. Acquisitions of Aro Finance and Acre Platforms have taken it further into embedded finance, mortgages and financial product distribution, while AI is becoming more central to the platform. That means more than scaling a credit-score app. ClearScore now has to manage credit broking, mortgages, customer data, embedded distribution and AI across a larger financial marketplace.
Modulr processes more than 200 million transactions and over £180 billion in annualised payment value for more than 6,000 businesses. Its infrastructure supports payroll, supplier payments, collections and other finance operations where outages or control failures can affect many customers at once. Its scale problem is therefore operational as much as commercial. More volume and wider market reach increase the importance of resilience, financial crime controls and oversight of critical payment infrastructure.
Teya's 2026 product release extends well beyond card acceptance. Its offering now brings together payments, a business account, team cards, e-commerce tools, savings features and Teya AI. One merchant relationship can therefore span payments, cash management, spending and business data. That creates more regulatory dependencies inside a product experience designed to feel simple to the customer.
Urban Jungle says it has helped more than 300,000 UK customers and now distributes insurance both directly and through white-label partners. Its August partnership with IKEA puts Urban Jungle-powered home insurance into a much larger retail customer journey. That tests whether product design, pricing, claims and customer outcomes remain consistent when insurance is distributed through another brand rather than only through Urban Jungle's own channels.
Zilch passed 5.5 million registered customers and $200 million in annual revenue before agreeing to acquire Lithuania's Fjord Bank. Subject to regulatory approval, the deal would give Zilch a European banking licence and a base for expansion across the region. Zilch is now bringing consumer credit, payments, AI and cross-border banking into the same business. That is a very different regulatory footprint from the one it had when it entered the FCA's Regulatory Sandbox earlier in its development.
The Scale-up Unit arrives with evidence from the FCA's own supervision. Between July 2025 and March 2026, its Early and High Growth Oversight pilot worked with 15 firms across asset management, wealth management and payments to see whether governance, risk management and controls were keeping pace with growth.
The FCA found that stronger firms invested early in boards, risk management, compliance resources and management information. Weaker examples included governance that had fallen behind business growth, too much responsibility concentrated in a few people and insufficient independent challenge.
The reality is commercial growth can arrive faster than the systems needed to govern it. The regulator's answer is earlier engagement rather than waiting for those gaps to surface through an application, incident or supervisory problem.
The FCA isn't promising easier rules. Participation doesn't lower regulatory standards, guarantee approvals or amount to an endorsement of the firms involved.
What it is offering is earlier access to the regulator when a company is changing quickly. That could help commercially if firms can resolve regulatory questions before they delay product launches, permissions or expansion plans.
It also gives policymakers a closer view of where regulation itself creates unnecessary friction. That question is already live in Canada. Canada's competition and growth debate has increasingly focused on faster approvals, proportionate oversight and whether regulation helps challengers reach scale rather than protecting established market structures.
ClearScore, Modulr, Teya, Urban Jungle and Zilch will provide the first real test of whether that approach can deliver both: faster regulatory navigation and controls that keep pace with expansion.
Ontario's decision to join the securities passport tackles another part of the same problem where regulatory duplication can consume legal budgets, management time and capital without producing proportionately better outcomes. The FCA model goes a step further by asking whether regulators should actively help successful firms navigate the next layer of complexity.
Should regulatory support extend beyond startup experimentation and authorization to help established fintechs navigate the complexity that comes with rapid growth?
The 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, artificial intelligence, 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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About NCFA Canada | Craig Asano | July 24, 2026

David Gens is the Founder and CEO of Merchant Growth, a Canadian digital financing platform for small businesses. After graduating from UBC with a Bachelor of Commerce in Finance, David began his career as an analyst at private equity firm CAI Capital Partners. In 2009, at just 22 years old and in the aftermath of the global financial crisis, he founded Merchant Growth to help address the gap in access to capital for Canadian small businesses. Over the past 15 years, Merchant Growth has helped more than 15,000 businesses access over $1 billion in financing through technology enabled lending solutions. David also leads Merchant Opportunities Fund and has been recognized as a Business in Vancouver Top 40 Under 40, BC Business Top 30 Under 30, and an EY Entrepreneur Of The Year finalist.
What does it take to build a lending business that has deployed nearly $1.5 billion to small businesses over 17 years?
In episode 66 of NCFA Fintech Fridays, David Gens, Founder and CEO of Merchant Growth, shares how he built one of Canada's leading alternative small business lenders from the ground up.
We explore why many good businesses still struggle to access financing, how technology and AI are changing underwriting, what it takes to scale responsibly, and the lessons learned from serving more than 15,000 businesses. David also reflects on launching a fintech at just 22 years old, navigating changing economic cycles, building long term lending partnerships, and balancing innovation with disciplined risk management in an increasingly competitive lending market.
Whether you're building a fintech, running a growing company, investing in financial innovation, or interested in the future of small business lending, this conversation delivers practical insights on entrepreneurship, lending, risk management, AI, and long term growth. Enjoy!!
Duration: 110 mins
Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.
[00:00:30] Craig Asano: Hello everyone. It's Craig Asano, the founder and CEO of NCFA Canada, welcoming you to season 4, episode 66 of Fintech Fridays. It's a weekly podcast brought to you by NCFA and our partners featuring conversations with leading voices across fintech, funding, and financial innovation. We walk and talk to all the founders who are doing incredible things. We talk to them about their journeys, new product innovations, emerging trends in their market, and what's happening in the market right now from their perspective. So, today we're super excited to have another fantastic guest with us, and I'd like to introduce you to David Gens. He's the founder and CEO of Merchant Growth, a Canadian digital financing platform for small businesses.
So after graduating from UBC with the Bachelor of Commerce and Finance, David started his career as an analyst at a private equity firm called Kai Capital Partners. And in 2009 at the young age of 22 years old, we're going to get into this a little bit. just after the after the aftermath of the global financial crisis, he founded Merchant Growth to help address the gap in access to capital for Canadian small businesses. So during the last 15 years, I guess, Merchant Growth has helped more than 15,000 businesses access over a billion dollars in financing through technology enabled lending solutions. David also leads Merchant Opportunities Fund and has been recognized as a business in Vancouver top 40 under 40 and BC business top 30 under 30 and an EY entrepreneur of the year finalist. So David, thanks so much for joining us today to share your knowledge and expertise.
[00:02:14] David Gens: It's my pleasure to be here. Thanks for having me.
[00:02:16] Craig Asano: That is a mouthful. You have a lot of accolades there. I've always read all those.
[00:02:23] David Gens: You don't have to read all you remember the 30 under 30. You've you've been you've got a hell of a story and we're going to get into her you know, right now. But just to kick things off, I think let's get in with the first question. despite you know the advancements of technology and you know more financing for small business options than ever before small businesses it seems it's it's always you know never enough capital. There's always a struggle there to get enough capital to continue to grow. But from your perspective, what why is that gap why is it so challenging and has it changed or you know how in from where you sit in the last 15 years has it changed?
[00:03:09] David Gens: Yeah, it's changed. I mean we have obviously made a bigger dent into the problem. There's also competitors that we have in a whole industry now that you know really didn't exist when I started this. So a dent has been made but that doesn't mean the problem's solved, right? It's a big problem. It affects hundreds of thousands of businesses in Canada. and the problem is just that they don't have the kind of access to credit or capital in general that a larger company does. A larger company has the resources to spend time you know, sourcing capital in its various forms with finance teams and also on the other side of the table, banks that are providing credit and institutions etc. have the you know kind of the scale in those transactions to staff them up, be creative, have professionals look them over and figure out custom structured solutions to provide that larger business with that capital. With a small business, none of that exists in that way. And so it's it's cookie cutter solutions that traditional financial institutions look mostly at assets and whether or not they can lend against those. And if you're an asset light, cash flowing small business, you're not you know, given much credit from those traditional institutions. And if you think about most small businesses are asset light, but have cash flow. they serve customers in local communities. They might have a little bit of inventory. but at the end of the day, they typically don't have a lot of hard assets. and you know, any individual small business, by definition, they're small.
But if you add them all up, they're about half the GDP. they're two-thirds of the country's employment. So, it's a massive space when you really look at it as a whole. And so, if we can make our dent in it, we think that is you know, something worth doing and can really drive successful outcomes for more small businesses. We want to see a world where there's lots of successful small businesses. We're not all just transacting with these large behemoths. we think that's just kind of a more interesting world to be a part of and so we're we're here to support it, level the playing field. and you know and build a business ourselves out of it as well.
[00:05:20] Craig Asano: Music to my ears. I mean you're fighting the David and Goliath battle sometimes, but it's the one that many of us choose to fight. small business are innovators and we sit at the heart of where that innovation is happening from the from the financial services side. So, you know, hats off to you and to making it work, to the successes that you've had. So, let's talk a little bit for those who don't know about Merchant Growth, you know, maybe introduce Merchant Growth a little bit and, you know, that backstory, that founder story. You know, how did you get into it? You know, you were working at private equity. we had that global financial crisis, but at the ripe age of 22, you decided this I'm going to have a go at this. So, illuminate us on that founder journey a little bit.
[00:06:16] David Gens: Yeah, I was always driven to do my own business. I come from a family of entrepreneurs. My dad, brother, and uncle all had their own companies. I was, you know, I was a little bit entrepreneurial in high school. my the thing that I sort of ran in an entrepreneurial way. Wasn't very profitable was my rock band. I had a band. I played the bass and I sang. but we were booking shows, getting shirts printed. We had a van. We were going around and making a go of it. And you know, that was you know, like I said, not a not a profitable venture, but nonetheless, it was you know, getting a team aligned and making something happen. So, I knew it was a matter of time. Eventually, I wanted to sort of start my own thing and you know, work hard and hopefully, you know, see the upside of having equity and something that I build.
You know, I thought that I was going to last longer in that private equity world, but it became kind of clear to me that it wasn't scratching the itch for me. I really wanted to start my own thing sooner than later. And I got advice from my older brother who, like I said, was an entrepreneur. He said, "Kind of the sooner you get going, the better. time is on your side. things take time to build. and there's always an excuse, you know, why you might want to not do it. just ignore that and get going. So, that is what I did. And I looked at this growing market in the US for non-bank small business credit and looked at Canada and recognized the huge difference between the US and Canada. There were already a few large players in non-bank small business finance in the US there. That did not exist yet in Canada. And so I did a little more research.
I talked to some small businesses saw if you know how do you finance your growth where do you get credit and basically it was clear that they had no awareness of the space there were a few player players already in non-bank small business finance at the time in Canada but they were tiny and no one had heard of them yet so I felt like I was on to something and that Canada would play catch-up to the US you also had that backdrop of the great financial crisis and this multi-decade secular trend of less small business credit being provided by the banks that only accelerating post great financial crisis So, you know, I a way I went with a business plan and started funding those first few credits. kind of word of mouth, found some small businesses with credit needs. but it was definitely very small kind of humble beginnings.
My initial goal was just to get the business to the scale where it could pay me a salary so I could, you know, pay my cost of living. and do so being my own boss. Like that was that was goal number one. And then you kind of built it from there. One thing I liked about this business plan was it was an all or nothing. You know, it's not like either, you know, you succeed and it's something huge or it's a zero. It was more like, you know, I just need to do a good job, be responsible, do a good job of underwriting, serve investors well, you know, find more and more clients over time, and, you know, I could kind of incrementally build that business over time. and so that resonated well in terms of my own kind of risk appetite because I really wanted to, you know, find something that would work and hopefully grow over time.
[00:09:24] Craig Asano: It's awesome. I in particular I like the band part. Do you do you do you ever find yourself thinking back to those days and you know what happened to the band? Have you reconnected with the band?
[00:09:38] David Gens: So I still play music. I and I continued playing in bands even when I had the business. you know, in 2013, for example, I was 3 years into this business and I was touring with a couple different bands that year. so I Yeah. Yeah. So, I was I was I took it pretty seriously. you know, this is obviously not the topic of the podcast, but one of them had a had a had a rock radio number one in Canada, and so we opened for Guns N' Roses and Alice in Chains and a whole bunch of rock bands. So, I got to like bucket list. I was able to play on some big stages for a bit which was just so fun. but terrible way to make money. I mean horrible. those especially those bigger shows where we were opening for bigger acts. Those were also the worst paying shows we ever had because you're kind of being paid in exposure in instead of cash. So in any case, it was a lot of fun but also not profitable.
I continue to play music. I still do. Obviously it's just for fun these days. but yeah you know there is a lot of parallels for sure. you know it is a team sport you know playing in a band. and the same way that team sports you know help teach leadership and confidence and also how to kind of collaborate and have you know a team dynamic. bands certainly have all of those same elements. and you know it's yes I've got business partners in what I do today too. So equity partners, people who are like in it and on the roller coaster ride with me day-to-day the same way as back when we had the band. So you know you kind of if you want to do anything big most of the time it does take a team to do it right.
[00:11:17] Craig Asano: Well I mean you've got an appetite for some risk. Not everybody's willing to get in front of the crowd to open up for Alice in Chains and rip on a guitar.
[00:11:25] David Gens: I you know I was I was on I was on the drums for that one. Yeah. Yeah.
[00:11:29] Craig Asano: Yeah. I'm talking paid five till I got kicked out of the but those early well see it's interesting like to have that get up and go th there are some founder insights there I think as you were talking about team and collaboration and leadership but really the problem you know getting back to Merchant Growth that you were tackling is the one minus of more the traditional lending routes the capital raising routes through the banks and the options so building outside of traditional banking, you know, in those early days, like how did you make it work? How did you build the trust? you were saying you found the business model that didn't have, you know, excessive risk was something as long as you worked hard, it was sort of contained. But there must be some challenging stories you remember and some lessons there that maybe you'd like
[00:12:21] David Gens: Yeah, I think one thing that made the business model possible is that people were starting to get comfortable with financial services being done digitally. you know, applying on a website, talking to someone on the phone, not necessarily meeting them in person. the idea of going into the bank branch was starting to, slowly, fade away. obviously we still live in a world with bank branches, but there's a ton of stuff now you do digitally.
So that trend was helpful but you know I was young when I started and didn't have a track record and to your point you know why would people take me seriously and the truth is it was hard a lot of you know it took convincing so you know I think the one advantage was we were taking applications online and doing things over the phone so people maybe didn't necessarily know how young I was but I also had to you know get the trust of investors who actually funded these financings because you know I didn't have the my own money at the time. So we that part was you know as hard if not harder than finding interested borrowers. and so it that was really you know leaning on friends and family. It was small checks. Like I said the initial goal was just to get it to pay my salary. So, I wasn't trying to shoot for some crazy number.
But you know, I was willing to, you know, spend hours with someone who might potentially invest 5 grand into the fund right back then. And, and so I was, you know, just piecing it together bit by bit that way. And, and, you know, I feel a huge debt of gratitude today to those early investors because, you know, they were investing really in me. the idea that I would continue to work hard and figure it out even if I made mistakes. That's what they were investing in because there was no track record or platform or you know repeatable kind of process at the time. So you know today obviously investors are investing in you know portfolio credit portfolio financings that's at scale you know a statistical underwriting model that's been bu developed over a decade. We've got the largest data set on, you know, credit performance for these types of small businesses in the country. And so it's, you know, what you're investing in today is very different than what those early investors were having to trust to move their capital over my way back then.
[00:14:54] Craig Asano: There's a lot of excellent lessons in there having just you know heard he heard that approach but the gratitude really stands out to never forget who helped you in those early days and I can really respect that and the friends and families everybody needs some help and so that's on both sides of that I think but you know that's that's excellent because you know if you have the largest data set of the credit decisioning and maybe you know more for small businesses for the last 16 years in Canada here you would be at the heart of like are Canadian small businesses they're borrowing more are there more of these small businesses are we growing in the right direction these based on that data set I don't know if you've analyzing it in that context recently but I'm just curious to know
[00:15:49] David Gens: Yeah I mean we're obviously we're closest to any data that pertains to our own applicants and customers. Obviously, we do track industrywide stuff as well to understand how the market is developing, what our share of that is at and where it could go as we kind of continue to plan for the business. but you know, it's it hasn't been a fast growing economy. You know, in the last couple years, we've seen slowing growth, but still positive real growth rates. I will say that our average applicant is growing a fair bit quicker than the Canadian economy as a whole. So we're seeing kind of high singledigit even 10% kind of real growth rates at our underlying applicants because it just goes to show that it this business model self-selects for a higher growth borrower. The reason they're coming to Merchant Growth is because their businesses are growing. They're looking for credit to help them continue to grow. Most businesses have positive working capital which means that as they grow they need more capital. and so we are here to provide that.
[00:16:55] Craig Asano: So when it comes to Merchant Growth you know you talked a bit well clearly you know it's a digital model and you've been at it for many years and but what about the products like what exact financing solutions do you is there a huge range? can maybe break that down a little bit for our listeners.
[00:17:15] David Gens: Sure. Our products today are term financing, which is, you know, a lump sum up front and then we're getting, a payment, pardon me, a payment, daily or weekly that in most cases is based on the revenues of the overall business. so there's an ability to kind of reconcile and reset that payment level depending on how the revenues of the business are trending. That's called revenue based financing. So effectively, it's like a royalty. We're buying a portion of your future revenues. we also do term loans. So that's just a straight loan agreement. you know with an interest rate and a typical kind of term loan setup. also in that case it's an advertising product. so we're always getting principal back with each payment. and last but not least is line of credit. So we also do have a revolving product. you know how that's evolved over the years.
We started out just doing the revenue based financing and we were initially doing it based on credit card sales only, credit and debit card sales. That product is called a merchant cash advance. We started in that space then we went to overall revenue based financing and term loans. but really the biggest innovation I would say has is perhaps less visible to the customer but it's in that automated adjudication. It's in the statistical scoring model. It's in the risk based pricing and what that has allowed us to do is accurately price risk across a spectrum. And so we're able to, you know, win that very price sensitive, super high credit quality, larger business and provide product that's appealing to that customer, but also say yes to the risky customer who is, you know, much more likely to be declined no matter where they look.
And we do that by understanding the underlying risk in each applicant. You can only do that if you just do a ton of financings and you're able to study the history of that and then use, you know, machine learning techniques to build sophisticated models to, you know, figure out how to predict those outcomes going forward. And I think that's been key to our success. you know, our competitors were a little bit more like one-size-fits-all. You know, here's roughly the rate. and it just applies to whoever comes in their door. and again, that's just not precise enough. And I think we've been able to really refine that in a in a way that's allowed us to scale you know, more elegantly, I'd say, than other companies in the space.
[00:19:43] Craig Asano: Yeah. You often hear there's a lot of thin files or no files. but let's say it's an immigrant entrep entrepreneur, new immigrant to Canada, but they've got a ton of experience and you know, back where they came from. they get here and they don't they don't really exist on paper or is that would that be a good example? They come to you and what would their the journey like what would the customer journey be like? You've got advanced underwriting that adjudicates the risk and loans, but is it is it just a website? They come in and fill out some information. Walk us through the customer journey a little bit.
[00:20:14] David Gens: Yeah, that customer is potentially going to look slightly riskier to our algorithm. you know kind of all else equal, but not necessarily, right? Because the personal credit file of that individual is just one of many inputs into our own scoring model. we call it the merchant score. that's where we've used you know machine learning to really get a lot of predictive insights from a variety of different data sources. So to talk about the customer journey and what those data sources are one it's the application that customer fills out on Merchant Growth. com or through a partner of ours. that's going to tell us things like years in business industry location etc. the next is the personal credit file. do still look at that and there are predictive elements within that. But the next and most important is the bank transaction data.
And so we get at least 6 months of bank transaction data from the operating account for that small business and we run an algorithm that helps us figure out what the revenue of that business is. Remember not every deposit into an account is a revenue. It could just be you know the business owner putting money in or drawing on a loan or something else. so really detecting what the real revenues are, what the expenses are, whether they're variable or fixed, and then being able to run analysis on that. And then various other things that, you know, you can basically kind of cluster data between the bank data and applicant data and other things to sort of get a picture on a certain dimension, which that might sound really complicated, but that's kind of the way machine learning works is you try putting different data together and see if it's predictive.
And the algorithm learns over time and then you know you al also always do need to be able to explain it. You know why is a high value good or bad or what the case may be before you include in the model. But you know there is a lot going on there and it's too much to even be able to kind of talk about in a in a very short podcast. but also on top of those three, there's a fourth data source which is kind of a catch-all for all the other data we're able to pull which includes the business's online presence. So do they have a website? Do they have online reviews? And how good are those reviews? How recent are they? How many are there? How is that relative to the size of that business? Does that sort of jive all that kind of stuff? So, that's important in certain industries, less important in others, and our, you know, score understands that, all of that.
So, in other words, you know, if you're thin file on your personal credit, but you got a strong business, like, we're going to notice that and you're still going to get approved by us. and I think that's kind of one of the cool things about our business model is we're trying to solve for is this business you know, trending well, is it sustainable? Does it have the cash flow to service credit? And on that basis, we make credit available.
[00:23:14] Craig Asano: And so that would be sort of a snapshot of more like the a good customer, the ideal customer. They've got enough data. They're they're willing to share it. They need access to this capital and they go through the adjudication engine. How long does it take for that growth the merchant score to pop out? Is that something that the customer that goes to the website sets up an account and they don't even call in, they go right to the website. How long if they supplied that information, is it is it something that happens real time? Is it is it instant or is it like
[00:23:49] David Gens: Yeah. So, what I just described is filling out the application, connecting that bank transaction data that can all be done as part of a five-minute application and then our score automatically runs. So, there's no other human involvement required there. So, you know, within literally 1 minute of completing that 5-minute application, we have a yes or no, and here's what the offer could look like. Here are the terms available, etc. And at that point, one of our, representatives reaches out to the business, explains the different options, acts as an adviser, kind of figuring out what would fit their need best. And then once the business owner chooses what type of financing structure they're moving ahead with, then contracts go out for electronic signature and a few other documents may be requested.
If it's a smaller credit request, then frankly, they just need to verify their identity and away we go. If it's a larger credit request, we could ask for things like tax docs and financials, but it depends on the industry and the size of that credit request. but if you're you know if you're a small business owner and you're highly engaged with the process and you're looking to get it done fast then we regularly
[00:25:03] Craig Asano: You know fund businesses that apply in the morning by the time the afternoon funding goes out and what are the size of those numbers on average like the small ones versus the large credit requests? Is it that might take a little bit more due diligence? Where does that
[00:25:18] David Gens: So, you know, our funding amounts you know, range from 10,000 to a million. our we do a lot of small financing. So, you know, our average financing amounts about 50,000. those kind of like more tax docs, financials that those kind of asks tend to kick in around between 150 to 300,000
[00:25:41] Craig Asano: Depending on the industry, right? And so we have a picture of sort of the process and who might be suitable for it. Who's not suitable really for that you might think it's not you know it's not a good fit. We usually talk about I think it's a good question that we usually bring up on this podcast. It's like the ideal customer and it's also hey who's the not the ideal customer so people can you know understand that.
[00:26:12] David Gens: Yeah. One is just if it's day one funding, right? If it's a startup that's not in revenue yet, I wish we could help those businesses. I truly do. But without any history of cash flows, there's just nothing to bank on for us using our approach. and so that is that is one area we can't go into. The other one is just lumpy cash flow profiles. so if you're project based, you only get paid once every few months when you complete a big job. that's that's too lumpy of a cash flow profile. Again, we're banking on the fact that you have some consistency in your revenues and your cash flows to be able to service the credit we provide. so things like resource extraction, that's obviously a too lumpy of a business and not to mention commodity exposed, but often times it's exploration and pre-revenue too.
So you know we tend to fit best for those kind of consumer-facing small businesses you know restaurant retail health and wellness auto repair etc you know trades maintenance trades we do some B2B like wholesale distribution and manufacturing but it's it's a smaller part of the portfolio again just as long as the cash flow profiles are consistent then that means that you know more likely than that you know we are able to approve you if you also kind of meet just the minimum size and time and business requirements.
[00:27:35] Craig Asano: Perfect. That's a good answer. Do let's talk a little bit about since you've done you know over 10,000 financing so it's a big number to me in this manner with this approach and all those learnings and this massive experience what you must have seen a lot of sort of truths or misconceptions that maybe some small businesses have. So, it's a good opportunity to really dispel any myths that some small businesses might have that you've sort of seen as recurring patterns. You're like, you know, here it is again. Is there anything that you see in the data or in your experience that sort of pops up and you say, hey, I wish you know that we could advise them and tell them this is something that, you know, you need to learn, make the process easier for everybody.
[00:28:19] David Gens: Yeah. You know, it's going to sound like I'm I'm I'm kind of selling against myself with this comment, but you know, credit is a tool. It's a powerful tool. It's an important tool. It's allowed you know, frankly, like humans to just progress in a in meaningful ways by taking capital from savers and putting that capital to productive use in other parts of the economy. we've definitely you know advanced as a species as a result of credit to be not you know can't really overstate that but it's a so it's a it's an excellent tool but it can be abused just like any tool and it doesn't it's not the right tool in all circumstances. you know this doesn't apply to you know too many of these small businesses that we work with but some of them will take whatever's available to them and we're thoughtful about our offers. We always want to make sure they're sized appropriately and affordable.
But not everyone in the space is as organized and diligent about that. and so you know there are higher risk financing businesses that finance frankly the businesses that you know we wouldn't finance or perhaps we have financed but we've maxed out on what we would do. And so but you know these higher risk folks are still willing to lend them even more. and so you sometimes see small businesses carry multiple loans at the same time from you know the non-bank small business finance space and you know that's tough on cash flow. It's tough to kind of you know really make that work long term. It's not necessarily sustainable. You end up kind of on a treadmill with too much credit in your business. And so, that is one thing that I kind of, you know, the misconception I guess in that case is just like, oh, I'm I qualify for this credit. I should grab it.
I can use it and I can it's going to help me. It's only going to help you if you know the return profile on the investment on that you're able to make in your business as a result of getting that credit. If the return on that is greater than the cost on your credit, and even if it is greater than the cost on your credit, you got to look at the time horizon on that. If it's not going to produce cash quickly enough, you know, you're you're it's not really going to be positive for you cash flow-wise in the short run and it could potentially get you in a tough spot operationally if you're just really starved on liquidity. So that's one thing is just to be careful about having multiple financings at once and just making sure you have the right amount of credit that you feel comfortable with that allows you to take the risk that makes sense but not excessive risk.
[00:31:04] Craig Asano: There's a lot there's a lot there that's I mean I think a lot of small businesses get into that scenario. They've got their line of credit that's more personal I guess or maybe the business line of credit and then they get into those credit cards. How many times have we heard the stories and you know the single founder is using their credit card to launch a business and maybe they're telling it in retrospect or in hindsight after they've had a great success but risky days for sure. So I think that certainly good advice. You know moving sort of zooming out a little bit about the landscape the lending small business lending landscape have what have you seen that's been sort of developments that in the 15 17 years you've been at it? Because you know through my research for the podcast like one little breadcrumb trail is that competition bureau study. They're looking at is there enough competition in speed financing and so you know what trends or what are your thoughts on the amount of competition and is it efficient market where there's the right size types of businesses coming to apply and getting funded. And to your point earlier, it's the fact that credit exists has allowed humanity well the humanity of small businesses to do things they couldn't do without it. So it's an incredibly useful tool. But from that competition angle as well as some trends what you know what's happening in the SME lending landscape.
[00:32:36] David Gens: Yeah. I mean I think that study is looking at all of the financing options for a small business. So it's looking at it in the context of you know the banks, the equipment leasing businesses and you know government programs everything and everything anything and everything I think in terms of getting more credit flowing and encouraging more competition. I'm sure you've talked on your podcasts about open banking over time. so I won't, you know, beat a dead horse, I guess, but, you know, that would make it a lot easier for businesses like Merchant Growth to serve, those small businesses in a consistent cost-effective way and over time as opposed to you know, the connections we've we've had to rely on in the past that were less reliable than they would be under a proper open banking framework. So, that is you know it's been announced that's that's coming. so we're excited about that. You know I think that again the space has come a long way in terms of the number of players and how much of the market we've been able to assist. but there's still a lot of work left to do.
[00:33:56] Craig Asano: Absolutely. ju just curious so you're based in Vancouver. Do you're national. you can service any small business nationally.
[00:34:07] David Gens: Yeah, absolutely. Yeah. Yeah, we that's always really been the case. I mean, there was a time when we didn't have French contracts, so we couldn't do Quebec, but that was a long time ago. So, yeah, for all intents and purposes, we're were all over the country.
[00:34:20] Craig Asano: And do you find that I guess it's just a function where most of the small businesses I know in Toronto, GTA or Ontario there's there's a lot of activity. Montreal is pretty hot. Van Vancouver has always been a hot bed of startups, but they might not fit that exact profile based on you know what you're talking about. But where's the distribution? Is it is it heavy Ontario? Where is it?
[00:34:42] David Gens: We are overweight slightly relative to the population in Western Canada given our kind of roots and time zone and stuff. But a and you know we're probably a little underweight Quebec just cuz we have not as many French speakers on staff. but we do have them across all the different functions in the business. but apart from that, it really is kind of wherever the Canadian population is. Ontario is our biggest market. and you know, we look forward to actually doing more in Quebec in the near future as we plan to staff that up a little more. but yeah, that's kind of the makeup today.
[00:35:26] Craig Asano: Do you find, you know, after being in the business so long and building I'm not sure how large your team is, but as you scale, or do you do you still get excited about funding a particular business, you know, story, the customers come back and say, you know, David, I got to come back and thank you. This has been the best thing that's ever happened to our business. And does is that kind of partly what's motivating you? Is it is it the efficiency?
[00:35:51] David Gens: Yeah, I love it. I mean that feedback loop for me these days is looking at our online reviews. so I see it there. You know I myself am rarely on the phone with customers anymore. but sometimes I am. You know we had this big sales push during the repayment of the government program known as CEBA Canada Emergency Business Account which was a COVID relief program part of which was repayable all at the same time and in January 2024. And that was a huge push. We were just financing companies to take advantage of the government discounts that were offered. You pay out a lump summon in that January 2024 time frame. So we had all of us including me like with headsets talking to customers at that time getting that done which was actually a lot of fun. but yeah these days it's mostly looking at those reviews online. And we also have been using AI to study the conversations that we're having. You know, it's pretty interesting, right? You could have AI look at the transcript from, you know, 10,000 calls and help you understand your customers and their personas and that'll in turn help us serve them better. you know, and their so that's that's been fun and exciting. But yeah, no, absolutely. Like I love what we do because we're helping these small businesses. we're leveling that playing field like I talked about earlier between them and larger businesses. So big part of why we get up in the morning for sure.
[00:37:24] Craig Asano: So you know you touched upon the AI underwriting. You talked about you know other maybe creative uses for AI just being able to help maybe some of the customer journey or be interesting to match it against your Merchant Growth score to see if that could be even improved using AI or maybe that's giving too much secret sauce away to AI as it you know eats everyone's lunch. But you know I want to focus on that AI piece and sort of the modern underwriting. You've obviously seen tremendous changes from starting 17 years ago was manual. I caught earlier you were saying some of it you were still on the phone but they were on the website. The customer we really know is you doing the phone call thing on the back. but in you know maybe just add a little color to the use of AI and I'm I'm curious about the human oversight aspect. You know, where is the line drawn because everybody's getting jazzed up about AI agents and this is the whole autonomous and humans won't be involved and then there's a whole another camp and so where do you sit on that human oversight versus you know you know the AI engine that you've built and you must have some vision or interest in maybe taking it further integrating it further so what are your thoughts on sort of the modern how AI's modernized it and you know, people's involvement in the future here.
[00:38:53] David Gens: Yeah. I mean, I don't think it's completely black or white. there's no doubt in my mind that as a financial services business, we are more impacted and more frankly, we just have a lot more leverage to what AI can do. because it is an information business. It's information in, credit decision, pricing decision out. you know providing that customer service you know and providing a return to the investors and the credits on the back end. AI can help with a lot of all of what I just described. having said that I don't think it's going fully automated absolutely no humans you know not for a long time. So on the on the underwriting side that's where you see you know a lot of potential for sure. I think our merchant score you know it's it's a it's a kind of AI 1.0 which was machine learning.
Now with the language models to your point we could actually have the language models spit something back that we could then incorporate into our score. I think that's that's the way we would think about using LLMs in that context. LLMs are helping our underwriters get a complete summary on a deal in a way that just saves them a number of clicks and actions and kind of like research work they used to have to do manually. So that's awesome. so I think in terms of just kind of how much volume can be done per underwriter, that number is climbing and climbing and we'll continue to climb with AI. but I still, you know, it's still a ways away to the point that you don't use them at all. Now, we already have no underwriter on some files, right?
So, if it's a really small file and it's looks very normal, like there's nothing unusual about that file, then we have a separate model that kind of ask answers the question, is this the type of file that could be an automated funding? if it passes you know that model then we actually will put it through as an automated fund. Again, very cookie cutter simple scenario for a small amount of credit. if it's a larger amount of credit or if there's anything unusual then it kicks out to a manual review. So it's it's kind of like you know AI is like your autopilot. You know basically commercial airline pilots haven't really flown planes in many years. they just, you know, pull on the yolk or the stick just to take off and then they just pull on it one more time when they're landing and the rest is all automated.
But they're there just in case, you know, and they're there for that like those couple of really important moments. And I think that's that's how we think about AI and underwriting is, you know, you're going to you're going to have those edge cases and unusual scenarios, this or that, or just changing environments. So, you're always going to want someone kind of overseeing the whole thing, too. now on the sales front I think there's less leverage from AI. as exciting as voice AI is and the fact that you know sales is just it's just a conversation so it's just language and so you think just AI is going to take that over but I don't see that happening very quickly because you know there's a trust building that needs to occur and you want to get that commitment from the business owner and that commitment is really only felt in a human conversation as opposed to a machine conversation.
So I again though you can do more volume per salesperson and you know some of that kind of you know more prospecting type work lead nurturing type work you could have AI do some of that but I don't see this the you know death of the salesperson anytime soon as a result of AI
[00:42:35] Craig Asano: The death of a salesperson. Well, what about the like fraud? Is AI on the fraud desk, the fraud file? Can you see because you often hear that the can help maybe security as well, cyber security?
[00:42:51] David Gens: Yeah. Yeah. No, I think it can absolutely be helpful there. And that we're we're already, you know, I mentioned the AI summary for the underwriters. There's there's things that the AI, you know, being prompted to check for that can help there. and yeah, I mean, look, it's it's it's it's going to be in everything. It's already in a lot of things. so it's it's a fascinating dynamic time, especially if you run an information business.
[00:43:20] Craig Asano: Oh, that's true. As you were talking, it just a thought popped in my head. I say, hey, maybe I should run a fintech conference just for AIs. I wonder that would probably be not that interesting.
[00:43:34] David Gens: Just watch the AIs attend the conference.
[00:43:37] Craig Asano: AIs attend the conference and take it over. I don't I would have a role. so we're we're moving down our list of you know topics that I want to talk about and we're getting to the next one. You know, one thing is about Merchant Growth business and scaling it and you know, I in the research like a billion dollar is a pretty big number and 15,000 businesses. but are you like how much volume do you do a year annually? Is that something you'd be willing to share or is that
[00:44:06] David Gens: Yeah, you know, I'm I'm fine to share that. Yeah, I've posted it on LinkedIn before. and you know, we're we're I mean it's it's it's moving around. and we're, you know, growing, but we're only halfway through this year, so I can't tell you exactly what, you know, we're going to end the year at, but you know, we're we're in the sort of, you know, we're doing over 400 million a year.
[00:44:34] Craig Asano: 400 million a year right now. You're scaling. Beautiful. So that's exciting.
[00:44:39] David Gens: Yeah. Our since inception number is almost 1.5 now.
[00:44:44] Craig Asano: Yeah. Yeah. Wow. Fantastic. So can't even keep up with it. So the so during my research I came across the Merchant Opportunities Fund is something that you're you're leading. Could you talk a little bit about what that is and how it works and
[00:44:52] David Gens: Yeah, definitely. Craig Yeah, that's that's how we fund the portfolio. So Merchant Opportunities Fund and Merchant Growth are you know they work very closely together the two companies, right? Merchant Growth is the originator and servicer of these Canadian small business financings. but the actual risk sits with the fund. So the fund is the balance sheet. you know the contract that the borrower signs is you know with the fund because the fund is the actual holder of that credit. and you know we set it up that way for two reasons. One it's what I knew because I came out of that private equity world where I learned about funds fund structures.
But two is because I knew that if I was going to have to raise all this capital to do these financings, if I was just going to use a corporate balance sheet to do it all, I'd end up diluting my ownership in the business you know, considerably in order to accomplish that. and you know the valuable piece is the brand the ongoing origination the underwriting model the data the referral network etc so that's the that's where the value is the person funding the loan just wants a yield so it's a very different type of investor for a different purpose and so makes just separating those two made a lot of sense to me and so we've always funded the financings out of this credit fund and then the actual operating business as a separate entity. and so investors across Canada and frankly globally can actually invest in Merchant Opportunities Fund. We have over thousand investors.
Folks are getting you know last 3 to 5 years we've been consistently doing sort of 12 to 14% net returns to investors. So I think that's pretty good. We're pretty proud of that and investors seem pretty happy with that. and you know we're also distributed through some of the broker dealers and so wealth managers are also buying for their clients too at some in some cases.
[00:47:10] Craig Asano: Are you looking for more BDS like broker dealers and just you know there's bound to be some listening to the podcast. So I would throw it out there that if you are that they should come talk to you of course for
[00:47:20] David Gens: Yeah. Sure. Sure. I mean, yeah, we're we're we're approved at three good broker, you know, independent broker dealers. we are looking for more. We do it's one of those chicken or the egg things. You need to get some advisers that want the product and then they champion you internally with their product approval folks. and so you know that's a process and it took us a long time to get a few of the approvals that we do have. So right now we're more focused on just you know building relationships with the advisers at the shops where we already have approvals but obviously we're we're all ears to anyone who thinks this is an interesting asset class.
[00:48:02] Craig Asano: One interesting question here I've got on my hit list is the Canada's SME pipeline. You know, there's this idea right now that there's not a lot of I mean, small business is everybody knows is the backbone of many countries, including Canada. I mean, they're they're they're where all the jobs are, where all the GDP is. but there's a lot of talk about things have slowed down. Maybe they're talking about startups. Maybe they're not necessarily all SMEs consumer-facing that you might be integrating with for loans, but do you but it was an interesting question that I wanted to get your opinion on. You know, where do you see Canada's sort of entrepreneurial pipeline these days and because it feeds directly into your SME, you know, lending business. is that a concern?
[00:48:50] David Gens: Like are we drying up here or is there what's the future look like? from what I've gathered, you know, it could be better. I mean, obviously we have less immigration now than we did a number of years ago, as well. and, the economy generally just has been as a whole pretty sideways. you know, it hasn't been we haven't really been in a recession per se, although we did have hit a technical one this year for a couple quarters, but it really is just kind of like kind of sideways and sort of status quo. And I'd love to see it be better than it is. I one bullcase I have around AI is that it's going to be that much easier to be a business owner, right? in the past the intimidation factor of like incorporating and signing a lease and you know navigating insurance and certain regulations etc for whatever it is that you're doing like all of those types of activities are so much easier now with AI. I mean and so yeah the cost to get started is much lower and the intimidation factor is lower. So hopefully more people end up kind of embracing the potential that brings to be business owners.
[00:50:08] Craig Asano: Yeah, you still need the proper business plan, the underlying business case, but I guess the administrative the automation of that those workflows can be streamlined which through AI.
[00:50:20] David Gens: Yeah. I just think how many times has someone like just kind of randomly said, "Oh, this would be a business idea." Yeah. you know, but like it's almost never acted upon because like it's just so much work, you know, and it's like I'm and people don't have the confidence. It's like I have no I don't I don't know how to do that, you know, and maybe AI can just make a few more of those random idea conversations into real things.
[00:50:42] Craig Asano: The back of the napkin igniter. I like that. Yeah, it's an interesting perspective. So, we're going to talk a little bit about the future of alternative finance. though look you know looking ahead what excites you about alternative lending you know for small business financing in Canada the these are trends in industry that you've seen or you'd like to see development happen may maybe they're happening globally but why not here in Canada we
[00:51:13] David Gens: Often say what are your thoughts there yeah Merchant Growth has a mission to bring Canadian business owners the convenient, accessible, and trusted financing experience. convenience speaks to how easy it is, the speed, the algorithms, the AI, being able to kind of give business owners their time back because, you know, business owners wearing multiple hats. They're doing marketing, they're doing operations, they're doing finance. they want to get back to just, you know, working with their customers and doing what they're passionate about. So, we give them their time back. So, I see us continuing to execute on that. Accessibility speaks to that broad spectrum of risk appetite and being able to say yes more often than not. And then trust is kind of you know just continuing to build out brand and awareness of our entire space.
You know we did a survey of a thousand businesses and not of our customers but just random small businesses and to get a sense of how aware they are of not just Merchant Growth but non-bank small business finance and less than 10% of business owners were aware of it at all. So still a lot of work to be done there as you can imagine they all know the big bank brands and so forth. But our space still has work to do on that front. I think as we continue to gain scale, we're able to, you know, feasibly lower the rate to customers, because of just operational, economies of scale, but also our own cost of capital going down as we gain scale. And so that will allow us to, you know, move the business what I call up market, so into slightly larger businesses, slightly larger loan or credit amounts and at more competitive rates.
And that will really also allow our space to kind of move out of the kind of alternative kind of shadows. I don't know that's probably the wrong term. that sounds weird. But you know even the word alternative it says itself kind of makes us sound like you know these sort of the this higher cost higher risk credit offering and I don't think we have to be like I think that we can move more into the mainstream with scale. and so that's that's something that you know we're we're working on and you know it's not easy to do and you need to get scale and you need to do it incrementally and thoughtfully. you know there's there's been other small business finance platforms that have really tried to lead with a lowcost product to try and get the kind of lower mid-market business. but when you don't have that scale, it's really hard to actually execute on that plan and do it sustainably.
So yeah, I mean I see that you know, it's just it's just going to get easier and easier for businesses to get credit. and that's what we're here to do. And I think that's a very exciting future.
[00:54:03] Craig Asano: So if you if merchanting proat, you know, cumulatively that $1 billion figure is more like 1.5 billion. Where does that scale look like for you? and I mean it seems to be ramping up and you know to your point like there's going to be more access to credit and more awareness. We're only at 10% of education. and sometimes we're getting a bad rap calling it alternative lending or alternatives as you're saying you know we're the band members. Yeah. We're the alternative indie rock guitarists and singers, but really we're just trying to help and it's it's non-traditional, non-bank loan lending. But I is do you ever envision a point in the future where alternative lending or alternative finance is going to get so big that it will invert with traditional bank finding bank lending or that's you know it's not it's I mean it's look it's not impossible and
[00:54:59] David Gens: I mean at the end of the day the banks still play a meaningful role. I mean like at Merchant Opportunities Fund we get back leverage from BMO and a few other Canadian banks. So, you know, part of the capital that goes out with every single Merchant Growth financing is coming from banks. so, you know, they still play a play a role there. I do think like, you know, we can we can build better, you know, customer experiences. you I do think that playing field is leveling out. you know, traditionally the smaller kind of more startupy business who's building from scratch, not burdened by legacy systems is like in a better position to build, you know, elegant user experiences and stuff. I think that is actually leveling out where that advantage that the smaller startup has is going to become less just cuz everyone can like code things with AI and stuff.
But like in any event though, you know, there's even if banks start building better experiences and faster experiences for small business credit, I'm not I'm also just not overly worried about that from my standpoint just cuz there's such a big spectrum of risk and the banks are always only going to address a sliver of that spectrum kind of by design also due to regulations. So, yeah, I think that you know, the numbers can certainly continue growing here. but, you know, it's it's not easy and it's always changing. We've we've been traditionally kind of like a high growth business over our 17 year history, but you know, we went through a huge disruption during CO where our new volumes went, you know, basically almost down to zero for a little bit and slowly built back up.
So, there's, you never know, there's always things that can change and the economic cycle also, you know, does what it's going to do. So, it's a fun business in that, you know, you're you're having to think about a lot of different things at once, as you're, you know, trying to execute on growth in, you know, a space like our own.
[00:57:13] Craig Asano: Well, you're sitting in a pretty good spot. I' I'd say David, I'm quite impressed with the success you've had and you know quite frankly your perspective, your attitude on and you're still you know very vibrantly trying to help these small businesses and build and scale that business to what you know your success will look like. So you know as we move towards the end of the podcast I want to touch a little bit about the innovation and success for Merchant Growth. So, do you do you have any products or ideas that are coming in the pipeline that you're just super excited that you know you can you can mention it? I you know, don't give away the secret sauce, but you like what's what's what's coming out that you feel you can feel it vibing here over the next 3 to 5 years that's probably going to be an integral part of that scale, that growth.
[00:58:01] David Gens: We're like as busy as ever in our tech team despite AI being able to help you, you know, code. We're we've actually added developers even in that scenario. and we're shipping more and more stuff which is awesome. I would say not there's no single thing that I could say to you right now that you'd be like, "Wow, that's totally insane." It's more like it's it's a lot of little things getting a lot of little things right to make that you know to execute on that mission of bringing the most convenient accessible and trusted financing experience to those businesses. So you know the ability to refinance and access more credit as you've paid down your initial financing with us. you know that historically required a few manual steps. we're we're making that entirely self now.
We are you know re we're actually frankly we're rebuilding our loan management system which is huge project that's entirely back end right you know customers not even going to notice that but it's going to allow us to you know use AI in a more powerful way and scale our business and innovate on products faster than we historically be able to once we have that new infrastructure you know Yeah, we're we're we're launching a mobile app very soon. that's going to bring a lot of those self-s serve features, you know, right into your mobile phone and allow us to communicate with you through push notifications and all that good stuff. So, yeah, there's tons of stuff we're working on. No single thing is like totally earthshattering at the end of the day. You know, our product is to get credit flowing into Canadian small businesses. I will mention one other thing which is Merchants Market.
We have a marketplace of vendors and partners or that can be accessed on preferential terms if you're a Merchant Growth customer. anything from kind of payments, payroll, legal, insurance, etc., etc. you can you can see the different options that are out there and the pros and cons and like really kind of elegant product sheets and sign up right then and there with you know preferential pricing. So that's kind of we're trying to empower small businesses. You know, financing your growth is just the start and we're trying to give you the tools that you need to succeed in whatever vertical you operate in.
[01:00:38] Craig Asano: And do you which is an excellent idea. You've touched upon a few great ideas. I'm I'm wondering about going global. Do you ever think this is something that Merchant Growth like merchant global growth?
[01:00:54] David Gens: It's a debate we've had, you know, been we've been around long enough to have that debate a few times, right? Having been in business 17 years, we've we've always come back to just let's just stay focused on Canada. There's still so much work to do here. And we just don't want to drift our focus into, you know, multiple jurisdictions. You know, financial services don't export across borders super easily. You know, you got we're now going to have to train a model on new data. we're going to have to, you know, set up new infrastructure in many respects as it relates to, you know, banking, legal, etc., and regulations that you got to comply with, etc. So, it's a lot of work. but, I think that it's it's certainly not off the table. You know, it's something we could get to, over time. We do have some thoughts as to how we might do that if we were to do that. But, I would say that in the near term, we remain just really focused on Canada.
[01:01:42] Craig Asano: And last question before we get into the rapid fires here. five years from now, what do you think success for Merchant Growth and for Canada's small business community? What do you think it's going to look like for you from where you sit?
[01:02:01] David Gens: I think rather than yeah like more than any single KPI it would be you know I'd say we would have succeeded if we're more of a household name where it's like hey Merchant Growth is that platform that you know supports you and in financing and other ways if you're a small business owner just becoming a household name if we do that in the next 5 years I'd say that's success and across the whole space you know if you just have you know we survey the business all the time and it's like what are your main pain points etc like maybe access to capital could drift down on that list a little bit if we can solve that a little more you know I don't think it'll ever be completely solved and you know and of course you know this might sound harsh but not every business should be funded right you know it there is that adjudication overlay that you always need to have and that's the mechanism where you know capital actually flows to the right ideas that should be funded. But so you know that's that's all to say that there's always going to be some businesses complaining that they wish they had more access to capital. but nonetheless right now that complaint is you know way too frequent too often with pretty much every small business. Let's you know make that less of a less of a concern.
[01:03:22] Craig Asano: Yeah. here, here, here. And it's really sometimes a dagger to heart when that same question, that same company or a number of companies feel the pain so badly that they have to leave Canada and that really hurts and
[01:03:36] David Gens: None of us want that. So, I hear you and you know, good luck with Well, we see it and we've seen it. we don't like it and you know if we can have a hand in helping it I think we owe it to ourselves and
[01:03:54] Craig Asano: You know all the small businesses to do what we can for them but okay well let's get into these rapid fire questions. they're just going to be quick I'm expecting sort of quick answers here. so if you're ready I'm just gonna this is just something we do in the podcast just add a little fl little flavor little color.
[01:04:14] David Gens: So, are you ready for these quick questions? Okay.
[01:04:17] Craig Asano: So, first one, biggest myth about small business financing.
[01:04:25] David Gens: It'll take a long time to apply and figure out what you're able to get.
[01:04:32] Craig Asano: It's as quick as one minute from what I've heard.
[01:04:35] David Gens: Just a few minutes. Yeah, it's just a few minutes if you connect your bank account and you got it.
[01:04:41] Craig Asano: Next question. Rapid fire. one financing mistake founders make too often.
[01:04:52] David Gens: I'm I'm now going to talk not just about kind of like main street small businesses but also you know the more kind of venture startup ecosystem which is just picking the right capital solution depending on what it is you're investing in. you know, if it's going to produce cash flow predictably and quickly, go with credit. If it's risky, go with equity. Sometimes people just mix that up and then you get caught up in weird situations and sub-optimal.
[01:05:24] Craig Asano: Good answer. one technology that you're you're watching pretty closely.
[01:05:33] David Gens: I mean, how can I not say AI, man?
[01:05:37] Craig Asano: I you're not watching going to the moon with SpaceX or something.
[01:05:43] David Gens: I you know I'm just so focused on my business that I look forward to the live stream when someone's landing on Mars, but I'm not spending my days, you know, tracking that progress.
[01:05:56] Craig Asano: Yeah. Well, I am waiting for the nanobot to get into my clean my cholesterol out of my veins. I'm waiting for that one. Just clean me. Like, I don't need a pill. Apparently, these nanobots, they've been talking about it for years. Just go in and clean me out.
[01:06:13] Craig Asano: Next question. One lesson that you would give your 22-year-old self.
[01:06:21] David Gens: I get a shareholder agreement. My I didn't have one at first and I paid for it.
[01:06:32] Craig Asano: There you go. It's like getting a will. You need a shareholders agreement.
[01:06:35] David Gens: Yeah. Even if you it seems like you're getting ahead of yourself and it's like this isn't even a business yet. Like you know it's like you know what it's not that much money. Get that share agreement in case it becomes something.
[01:06:47] Craig Asano: Well it can always come something. So I think it's it's probably the biggest most salient piece of advice that an entrepre that might not know that absolutely get a get a shareholder screen. I mean yeah.
[01:07:01] Craig Asano: Last question. What still excites you the most after 17 years of being a digital lender?
[01:07:09] David Gens: Seeing people on my leadership team grow into bigger and bigger roles, looking after more and more things and they themselves leading larger and larger teams. It's been awesome to see people grow in the company.
[01:07:22] Craig Asano: Excellent. That's I can envision you know leadership team M&A buyout coming in 10 15 years when but you only started 22. You got a lot of years left. You got to keep some years on the back end of the runway. Get back into the band. Get back into the when you're when you're touring again. I'll I'll you we'll come out and you know, we'll we'll we'll see.
[01:07:46] David Gens: I'll let you know next time I'm playing. You're in Toronto, right, Craig?
[01:07:51] Craig Asano: Actually, I moved to Waterloo a number of years ago.
[01:07:59] David Gens: I don't have any gigs coming up there, but I'll let you know.
[01:08:07] Craig Asano: That's awesome. Maybe the Horseshoe Tavern, or an even bigger venue.
[01:08:16] Craig Asano: Okay. Well, this is you know wrapping up I guess for the for the benefit of listeners and I had a lot of fun on this chat with like the vibes. Want you to get your information out though like how do how do people contact you if they want to learn more information maybe you know the website, the email, all that good stuff. How do they
[01:08:37] David Gens: Yeah. If you're looking if you're a small business owner looking for credit, looking for capital to grow your business, then find us at merchantgrowth.com. And if you're an investor looking for income producing investments and you want to support small businesses in the process, then Merchant Opportunities Fund is something that you should look at. That's merchantopportunitiesfund.com.
[01:08:58] Craig Asano: Thanks so much David for joining us sitting down here valuable time. I've learned a lot as usual and as I mentioned it was a great conversation. So, kudos to you and wishing you and, you know, all the leadership team and Merchant Growth the success that you're you're looking for and all the all the help that you're providing to small businesses. So, it's absolutely fantastic.
[01:09:24] David Gens: Yeah, I had a lot of fun, Craig. Thanks a lot for the time and for having me on. Appreciate it.
[01:09:27] Craig Asano: Absolutely. So, if you're just, you know, to close things out here, if you're new to Fintech Fridays, please check out some of the incredible past episodes on the site. I think you'll be surprised with what you find. We look forward to seeing you next Friday for another episode of Fintech Fridays. Have a good weekend, everyone.
Outro : You've been listening to Fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and Fintech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit ncfacanada.org.
The 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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July 17, 2026 | NCFA Insight | Regulation And Policy, Wealth Investing And Trading, Risk Compliance And Regtech

On July 9, 2026, the UK Financial Conduct Authority reported the results of its finfluencer enforcement campaign. A coordinated week of action involving 9 international regulators produced 3 arrests, 6 criminal proceedings, 11 warning or cease and desist letters, 50 warning alerts and 650 social media takedown requests.
Canadian regulators weren’t watching from the sidelines. The Alberta Securities Commission, Autorité des marchés financiers, British Columbia Securities Commission and Ontario Securities Commission participated in the June 2025 operation. Earlier analysis asked whether finfluencers were facing a crackdown or clearer regulation.
The FCA’s latest figures show that enforcement has now become repeatable. Investigators can identify illegal content, connect creators to products and firms, request platform removals, issue public warnings and escalate selected cases into criminal proceedings.
The scale of the FCA’s supporting operation is just as relevant. During 2025, it issued 2,329 warnings about unauthorized or potentially fraudulent firms, compared with 2,240 in 2024. It secured 17 criminal convictions involving fraud, insider dealing, money laundering and data protection offences. Twelve people paid a combined £1.77 million in market abuse fines for market abuse.
Technology is improving that capacity. FCA automation reduced the handling time for simpler supervisory cases from as much as 4 hours to about 6 minutes on average. That doesn’t automate consequential decisions. It clears routine work so investigators can spend more time on repeat promoters, hidden compensation, unauthorized firms and cross border distribution.
The 650 takedown requests are the most commercially relevant number. Arrests attract attention, but removing hundreds of accounts and posts targets distribution. Illegal promotions lose value when creators can’t reach an audience, acquire leads or direct followers to a trading platform.
The FCA can examine multiple parties within one campaign. A creator may publish the content, a financial firm may pay for it, an affiliate network may track referrals and a platform may distribute it. The underlying product can then lead investigators to an unauthorized operator or regulated firm with weak approval controls.
Criminal proceedings provide the upper end of that response. The FCA accused 3 people charged after the 2025 operation of promoting high risk contracts for difference without authorization. Each faces an allegation of communicating an invitation to engage in investment activity contrary to section 21 of the UK Financial Services and Markets Act.
The April 2026 second global week of action showed how quickly the system had expanded. Seventeen regulators participated. The FCA requested the removal of 120 accounts and identified 1,267 illegal financial advertisements that reached at least 2,338,372 accounts. People or firms already listed on its Warning List accounted for 66% of those advertisements.
That 66% figure exposes a persistent enforcement problem. Many promoters aren’t unknown actors. They continue publishing after regulators have already identified the related firm, person or offer. Effective supervision therefore depends on account removal, repeat offender monitoring and platform cooperation, not warnings alone.
The FCA also secured a guilty plea, began criminal proceedings against 2 more people, issued 34 new warning alerts and updated 14 existing warnings during the April operation. Coordination now combines prosecution, surveillance, education and content removal rather than treating each promotion as an isolated post.
Canada’s legal foundation is already in place. In December 2025, the CSA and CIRO published Staff Notice 31-369, which explains how securities law applies to finfluencers, issuers and registered firms. The practical requirements appear in Canada’s finfluencer guidance.
The guidance doesn’t create a separate licence for creators. It examines the activity itself. A creator may need registration when they provide investment advice as a business, facilitates trades, arranges referrals or connects paid subscribers to copy trading. General market commentary may qualify for an exemption, but creators must still disclose financial interests and other conflicts clearly and on time.
Compensation also changes the compliance analysis. Cash payments, securities, affiliate income, referral fees and free products can establish a commercial relationship. A disclaimer such as “not financial advice” doesn’t cancel the substance of a recommendation, the creator’s compensation or the transaction being encouraged.
Responsibility extends beyond the creator. Registered firms must supervise people acting on their behalf, address referral arrangements, retain records and review relevant communications. Issuers remain responsible for paid investor relations activity and promotional claims made for their benefit. The joint staff notice applies the same principles to AI generated content and digital personas.
The investor evidence explains why regulators are paying attention. An OSC study of 655 Canadian retail investors found that 35% had made a financial decision based on finfluencer content. Those who acted on it were 12.2 times more likely to report being scammed on social media and 2.3 times more likely to have experienced a significant investment loss.
The OSC also ran a simulated investment experiment involving 1,465 Canadians. After viewing a promotional social media post, 38% bought the featured asset. Only 8% of the control group did the same. The full findings and behavioural differences appear in the finfluencer effect on Canadian investors.
Canada has also produced direct enforcement results. In September 2025, the Alberta Securities Commission imposed sanctions on James Domenic Floreani and Jayconomics Inc. for promoting 4 issuers through YouTube, X and Patreon without clearly disclosing that they published the content on behalf of those issuers.
The respondents received a $30,000 administrative penalty, $10,185.10 in costs and 2 year restrictions covering investor relations activity, public securities promotion and securities or derivatives advice.
British Columbia added a preventive layer during the April 2026 operation. The BCSC issued 14 compliance letters to YouTubers and other promoters who had discussed publicly traded B.C. companies. It also referred to an active proceeding alleging that sponsored issuer promotions weren’t disclosed clearly.
The FCA operates a national financial promotions regime and can report one consolidated set of arrests, warnings, takedowns and prosecutions. Provincial and territorial authorities administer Canadian securities regulation, while CIRO supervises investment dealers, mutual fund dealers and regulated marketplaces.
Canadian action may therefore appear as several provincial cases, coordinated review periods, issuer investigations, warning letters and firm supervision rather than one national enforcement tally. That can make the activity look smaller even when regulators review the same creators, platforms and promotional networks.
The operating implications are already clear.
Platforms are also becoming part of the enforcement process. When regulators can connect warnings to hundreds of removal requests, account access becomes a compliance dependency. Firms using social media for distribution can’t treat the creator’s channel as an independent marketing asset beyond their control.
Canada doesn’t need to duplicate the FCA’s structure to produce comparable enforcement. Its regulators are already participating in the same international operations, applying national guidance and using provincial proceedings. The open question is whether those actions will become visible as a coordinated Canadian program or remain distributed across separate regulators and cases.
Will Canada’s finfluencer guidance support coordinated enforcement across provinces, platforms and firms, or will separate cases continue defining the compliance boundary?
The 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 engages with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, 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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July 8, 2026 | NCFA Insight | Artificial Intelligence And Data, Risk Compliance And Regtech, Digital Identity And Trust, Cybersecurity And Fraud, Fintech And Innovation

On July 7, 2026, Lightworks, Scotiabank, Sun Life and TELUS launched The AI Consortium to jointly build critical AI control infrastructure in Canada. Lightworks will operate the consortium’s infrastructure and coordinate deployment across members.
The first project is an Agentic Control Plane, described as a system for enterprise visibility and control across models, agents, users and inference pipelines (think regulated enterprises). Future projects named in the release include an AI Operations Center and AI Token Exchange.
The announcement points to the reality that Canadian regulated enterprises are beginning to pool the control systems they’ll need before agentic AI reaches banking, insurance, telecom, compliance, fraud, advice and operations at scale.
The consortium model solves a practical problem. AI control infrastructure is expensive to build alone. Banks, insurers and telecom firms have similar needs around agent visibility, permissioning, audit trails, inference monitoring, incident response, cyber controls, governance evidence and internal authority.
Building those controls separately inside every firm creates duplicated cost and slower learning.
Pooling engineering, research and governance resources can lower build costs, spread deployment lessons across members and create shared IP that Canadian firms can improve together.
There is also a competitive angle. Large U.S. AI firms are already building control points around cloud platforms, chips, data centres, model access, enterprise tools and distribution. The AI Infrastructure Partnership from BlackRock, Global Infrastructure Partners, Microsoft and MGX was designed to invest in data centres and supporting power infrastructure, with a stated goal of mobilizing up to $100 billion including debt financing.
Canadian firms can buy AI tools from global providers, but the risk is eroding domestic sovereignty as buying isn't the same as control.
If banks, insurers and telecom firms rely entirely on outside platforms for agent permissions, runtime monitoring, audit evidence and governance records, they risk becoming downstream users of systems they can't shape and certainly not control. Shared Canadian infrastructure gives them a way to build capability, retain control knowledge and compete before foreign platforms define how enterprise AI is governed.
Collaboration also creates governance questions. If member firms rely on common systems for agent permissions, policy enforcement, monitoring, logging and deployment standards, that shared system becomes important infrastructure. Governance, failure handling, evidence retention, security incidents, membership, commercialization and Canadian IP will all shape whether the model becomes durable.
Those questions come with any shared system that becomes strategically important.
Traditional AI tools may summarize documents, classify records or support customer service. Agentic systems can act across tools, workflows and data environments, which alters the risk profile.
Companies need to know which agents are active, which models they use, which users can deploy them, what systems they can touch, what actions need human approval, how outputs are logged and how failures are detected.
The consortium’s Agentic Control Plane directly targets that problem by focusing on visibility and control across models, agents, users and inference pipelines.
The UK FCA’s Mills Review examines how AI may affect retail financial services, consumers, firms, markets and regulation. Reuters reported that the review raised concerns around AI driven financial advice, customer harm, fraud, cyber risk and reliance on a small number of technology providers.
Singapore is already more specific on agentic finance. The Monetary Authority of Singapore’s Safeguards for Agentic Finance at Runtime work focuses on how AI agents in financial services can operate safely, securely and reliably.
Regulated firms need more than AI principles. They need controls that define what agents can do, how human oversight is triggered, what gets recorded and how firms respond when something goes wrong.
Scotiabank and Sun Life's participation make this financially relevant.
Agentic AI could eventually support customer service, claims handling, fraud monitoring, compliance workflows, credit support, treasury operations, internal software development and employee productivity. Those are implications, not confirmed consortium use cases.
AI agents in financial services may touch sensitive data, regulated advice boundaries, customer records, third party tools, payment workflows, fraud controls and internal decision processes. The more useful agents become, the more important it becomes to know who approved them, what they accessed, what they did and how exceptions are handled.
Control infrastructure needs to come before wider spread deployment.
The consortium also fits a wider Canadian AI infrastructure theme.
In May 2026, the Government of Canada and TELUS advanced work on sovereign AI infrastructure. That project is separate from the consortium and should not be conflated with it.
Still, the direction is consistent. Canada is trying to build more domestic AI capability rather than rely only on external platforms.
Sovereign AI is not only compute. For regulated sectors, it also means governance systems, audit evidence, agent controls, security practices and operational knowledge that Canadian firms can shape directly.
Industry consortiums usually appear when a problem is too expensive, risky or systemically important for firms to solve alone. Financial services has seen this pattern before in shared utilities, payment systems, identity programs, fraud controls, standards bodies and market infrastructure. AI is entering similar territory because the costs and risks are common across regulated firms.
The consortium structure could create practical benefits, such as common controls, faster security learning, better incident response patterns, shared governance evidence and stronger procurement leverage with external AI providers.
This trend aligns with agentic AI risk and governance, where the core issue isn't only what agents can do, but who controls them. It also connects to regulated AI control gaps around data, vendors, fraud and operational risk.
The financial crime angle is important too. AI, programmable finance and financial crime are converging as bad actors use automation while regulated firms try to strengthen controls.
For NCFA's Financial Innovation Map, the relevant nodes include Agentic Finance, AI Governance, Digital Identity And Trust, Regtech, Cybersecurity And Fraud, Operational Risk, permissioned agents, auditability and sovereign AI infrastructure.
Follow-up questions are whether additional regulated firms join, whether regulators reference the model, whether the AI Operations Center is launched, and how the AI Token Exchange is defined in practical terms.
Will the consortium publish standards, audit methods or governance patterns? Does it commercialize infrastructure beyond founding members? Does it create shared security practices? Does it become a Canadian regulated sector AI utility?
If Canadian firms build shared AI control infrastructure to reduce cost, learn faster and compete with global platforms, who governs the control system once agentic AI becomes critical to banking, insurance and telecom operations?
The 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, artificial intelligence, 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](http://www.ncfacanada.org)
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About NCFA Canada | Craig Asano | June 19, 2026

Craig Arnatt is the Founder and CEO of PGI Cover, a specialty insurance brokerage based in Vancouver. His career spans more than 20 years as a commercial broker, insurance entrepreneur, and insurtech builder. In 2012, he launched EventPolicy, a fully automated consumer facing commercial liability platform, and later founded InsureCert, an insurance technology SaaS company. In recent years, Craig has led government supported research into the use of AI and large language models in insurance. He's now introducing Personal Guarantee Insurance to Canada for the first time through PGI Cover, a new category of specialty coverage designed to help business owners, entrepreneurs, and acquisition buyers cap their personal downside when signing a personal guarantee.
Most entrepreneurs focus on building the business. Far fewer understand that a single signature on a loan agreement could put their personal savings, investments, and even their home at risk. In Season 4 Episode 65 of Fintech Fridays, Craig Asano sits down with Craig Arnatt, Founder and CEO of PGI Cover, to unpack one of the most overlooked risks in entrepreneurship: the personal guarantee.
Craig explains why lenders require them, how they affect founders, business owners, and acquisition buyers, and what can happen when a business loan goes into default. The conversation explores the launch of Personal Guarantee Insurance in Canada, why the product has gained traction internationally, and how Canada's growing business succession wave could create new demand as entrepreneurs, search fund acquirers, and M&A buyers increasingly rely on leveraged financing to acquire businesses. Craig also shares insights from more than two decades in commercial insurance and insurtech, discusses the role of AI in underwriting and risk assessment, and explains how embedded insurance and fintech partnerships could help bring protection directly into financing workflows.
Whether you're raising capital, buying a business, advising clients, or lending to entrepreneurs, this episode offers a practical look at a risk that is often buried deep inside loan agreements but can have life changing consequences when things go wrong. Enjoy!!
Duration: 108 mins
Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.
I'm Craig Asano, founder and CEO of NCFA Canada, and welcome you to Season 4, Episode 65 of Fintech Fridays, a weekly podcast brought to you by NCFA and partners, where we feature conversations with leading voices across Fintech, funding and financial innovation. In Canada as well as around the globe. We talk about the founders'journeys, new ventures, emerging trends, and really what they're seeing in the market right now. Today we have another fantastic guest with us. I'd like to introduce to you Craig Arnatt.
He's the founder and CEO of PGI Cover. A Vancouver-based specialty insurance brokerage building a new category of protection for entrepreneurs, business owners, and acquisition buyers who sign personal guarantees on business financing. Craig brings more than 20 years of experience as a commercial broker, insurance entrepreneur, and an insurtech builder. He's launched EventPolicy in 2012, and that definitely rings a bell today. To someone in my shoes, I remember that, which is a fully automated commercial liability platform.
Later, he founded InsureCert, an insurtech SaaS company, and has led a government support research into AI and large language models in insurance. So Craig, we'd like to welcome you to the show. Thanks so much for joining us today.
[00:01:43] Craig Arnatt: Yeah, thanks very much for having me, Craig. Glad to be here. Yeah, so we've got a lot of questions, and it's a very super interesting topic. But we're going to just ease our way into here with the kickoff question.
[00:02:14] Craig Asano: So first of all, I'd like to call out that you've got a pretty cool name. Yeah. And it's rare we get a couple of Craigs on the show, so it's worth saying. But the first question is really, you know, most entrepreneurs think about business risk because they live and breathe it, but many maybe don't realize that They could be putting their personal savings or investments and even maybe their home on the line when they borrow money. So for listeners hearing about PGI Cover for the first time, what is Personal Guarantee Insurance?
[00:02:51] Craig Asano: And, you know, why has this risk kind of largely going under the radar? It might be invisible to founders and business buyers for so long, of which we're hopefully unveiling today. So, you know, what is it?
[00:02:51] Craig Arnatt: Yeah, so Personal Guarantee Insurance sounds boring right up until you realize that the cover is quietly covering the scariest clause in an entire loan agreement. So here's a setup. You walk into a bank as a business owner to get a loan. They smile and they say they believe you and believe in the vision.
[00:03:25] Craig Arnatt: But then somewhere around page 38, they ask you for a personal guarantee. And that is one signature that changes everything. It means that the business, if they cannot pay the loan, they do not just take the business, but they come after you personally. So that really means the house, the savings, the kids'education fund, the lake place you've been calling an investment. So a personal guarantee can be the most expensive autograph you'll ever give. Most founders signed it as the same way they accepted terms and conditions on a new phone or software.
[00:03:55] Craig Arnatt: You click accept without really reading a single word of it. So the whole reason PGI Cover exists is that we ensure the personal guarantee clause of that loan agreement. So if the business fails and the bank calls in the guarantee, our policy steps in and covers a large part of what you would otherwise be paying out of your own pocket. So, you know, the banks always ensure their downside. We've decided that the founder deserves the same safety net. So the second part of your question is, why did it stay invisible?
[00:04:28] Craig Arnatt: I think until recently, there was simply nothing you could do about it. It's one of those items that has no risk alternative. So it has always been just the way it is. A line item that, you know, the lawyers simply say you have to sign. So the business owners must agree to that or the loan doesn't happen. Yeah, we see it all the time in emails, the number of inbounds we get in the box that say, hey, you know, you're an entrepreneur. We've got all kinds of money. And after various exchanges back and forth, of course, there it is.
[00:05:01] Craig Asano: It's a personal guarantee. So hopefully as we dig in the conversation, we're going to, it's like an onion. I like it, you know, sort of unravel the various layers and get to the real core of the Of not just the protection, but the risks and what could happen in other cases. But before we get there, because a lot of this podcast is about founder journeys, we want to talk a little bit about your background on the show. When did you launch PGI Cover? Really, what led you to focus on this aspect of insurance, like personal guarantees?
[00:05:36] Craig Arnatt: Yeah, so I think many of us in the insurance industry fall into it one way or another. And I had a chance to buy a brokerage almost 20 years ago now. And I thoroughly enjoyed the challenge, learning contract law and the process. And prior to that, I had a technology background. So I participated in a number of technology endeavors once I got into the industry, working with carriers, brokers and MGAs. And the struggle has always been how do you modernize the insurance industry?
[00:06:07] Craig Arnatt: So recently, of course, AI has done amazing things. But over the years, we've pursued other initiatives trying to streamline a very archaic industry. So it is a challenge that I have enjoyed very much. So fast forward to a few years ago when a friend called and asked if I could get him a Personal Guarantee Insurance policy. I had no clue what that was for someone who's somewhat of a veteran. So that really began my research into the product.
[00:06:39] Craig Arnatt: The original thesis was created by Todd Davidson in the UK. He started a MGA called Purbeck and together we've been working together to launch this product here in Canada with the help of Markel Canada as capacity provider. So we are very excited about bringing this very new product to Canadian SMEs. So that's how I fell into the product and we were just launching this month in June, 2026. Wow, well, fresh, fresh information.
[00:07:11] Craig Asano: And I think it's an amazing problem to tackle. And this sort of a good segue into the next question, because, you know, most founders always are looking for a problem to build a product, but you're taking on an entirely different challenge, because it doesn't exist here in Canada, as I understand. And You're the first to to tackle it so that's a brand new you know category so can you just talk a little bit about that challenge and maybe what the it's it is very early so you don't have a lot of certainly months or years or even
[00:07:45] Craig Asano: months behind your belt to talk about it but what what is the reception been what what are your thoughts like how how is that going
[00:07:45] Craig Arnatt: Yeah, so the product's been running in the UK for, I think, almost eight years now. So they've had a very good success at it. There's also a version of this product in Australia. Jeff McNally runs that, PGI Australia. So, you know, building a better product is hard. Building a market for a product nobody knew they needed is a different venture entirely.
[00:08:16] Craig Arnatt: Most founders get to say, you know, here's a better mousetrap. I have the first convinced Canadian SME owners that you have a mouse problem. So that is a new category tax. You are not competing for attention, really. You're creating for the awareness of the product in the first place. So the upside is there's no competition in the lane, but the downside is there is no lane. So we're really paving it while we drive on it, so to speak. So that's the challenge. But the good news is that overall in the other countries that it is running,
[00:08:48] Craig Arnatt: it's been very warmly successful or warmly greeted and quite successful on the insurance side.
[00:08:48] Craig Asano: So you mentioned, which kind of doesn't surprise me, that it's been eight years in the UK. We don't have it in Canada. It's been X number of years in Australia. We don't have it in Canada. They've had these positive experiences and I can only imagine that it's doing what that type of insurance is meant to do as a product.
[00:09:19] Craig Asano: And so when connecting with those names that you mentioned who are running those businesses in those countries, Did they indicate that it was such a significant challenge to start a new category there in their countries? And when you listen to that and you know how Canada can be a little conservative with something new, did you... I mean, you, you, you're taking this challenge on, you're going to market. It's brand new. We're, we're helping, you know, get this message out and, you know, encourage many as, as founders, as well as potential partners to, to connect
[00:09:56] Craig Asano: with you if they are interested to, to learn more. But, what, what did those partners in those countries say about the challenges? I'd be very interested because like any new category, It's tough. It's always an uphill battle. And then something, some traction sort of moves or an obstacle or hurdle is overcome. And I wonder what those triggers are in this case. Yeah, it's an interesting question. And I've always kind of struggled for why this product doesn't exist.
[00:10:27] Craig Arnatt: I know that in the US They had a version back in 08 by a company that gave it a go. And there was some dynamics internally that happened that just didn't really work out. There was some issues with the internalization of that product. So other than the obvious that no one carries a product, the pleasant side of that product when you're talking about it is the realization from the business owner's perspective That it's a very important solution to their problem.
[00:11:04] Craig Arnatt: On the flip side, on the insurance side, it's a very difficult thing to challenge the insurance industry to come up with a new category of insurance. When you're talking to an actuarial, they're like, they don't fully understand it. It doesn't exist. There's a huge mountain to climb to convince the insurance capacity providers that it's worthwhile. But I think once they understand the real benefit, the value of it, then they then they do warm up to it. I think more than anything for me as a as a as a founder myself,
[00:11:38] Craig Arnatt: I've signed a personal guarantee and I kind of like, oh, man, You realize that your house is up on the line, you know, so it identifies, I identified with the product right away. So, you know, some of the more surprising things about the product itself is that you're talking to a sophisticated person in the room, which would be the lawyer or the lender or a serial founder. They're the ones that most likely have something to say about it. And they had no idea that they could insure it. So when they do find out that they can, then they get quite excited about it.
[00:12:13] Craig Arnatt: The blind spot scales with experience because everybody assumes somebody already solved it. But it is quite interesting to have discussions with people who are quite knowledgeable about the aspect of that clause in loan agreements. And when you tell them that it's actually available now, they do quite get excited about it. So I guess really the lesson for the founders, if a lawyer or lender is telling you that there's nothing they can do about a personal guarantee exposure, then they need to tell them about PGI Cover.
[00:12:45] Craig Arnatt: It's here today as of June and 2026.
[00:12:45] Craig Asano: Okay, well, fantastic. So let's get more into just understanding about personal guarantees. You know, why did lenders do lenders require one and how common are they in? In Canada, as you're saying, in small business lending, it's not here yet. But how common are they in the UK then as a result? Do you have any data on, you know, what sort of volume or what sort of percentage of these small business financings, you know,
[00:13:18] Craig Asano: these loans that are accompanied with personal guarantees? So sort of, you know, what is it that the lenders really required or not? Not really. And, you know, what what sort of data can you tell us about it?
[00:13:18] Craig Arnatt: Well, in our research, it's required almost every time. I mean, there are some loan programs that are out there. In the US, they have the SBA loan program. In Canada, they've got the small business lending program. And those programs are really designed to encourage lending.
[00:13:50] Craig Arnatt: But the personal exposure is still there. At the end of the day, people think, oh, I've got a government backed loan. Well, those programs, again, are just designed really to encourage lending. Interestingly enough, the UK government published a thing late last year, an article specifically mentioning personal guarantee and how they impact a business owner. So the government in the UK has actually made an effort to draw attention to that clause. And coincidentally, they've got Purbeck that can rely on to solve that problem.
[00:14:26] Craig Arnatt: And Jeff was telling me in Australia that the Australian government is doing a very similar approach, is that they're now making business owners really identify with that clause and to understand what it means. And I think more than anything, it's because lending is up for businesses in many places in the world. And the government's job is, of course, trying to protect business owners from impacts. So the personal guarantee really personally promising to repay a business debt if the business cannot.
[00:15:03] Craig Arnatt: It quietly erases the line between you and the company. Personal guarantees, the whole point of incorporating really at the essence, if you think about business structure, you incorporate to protect you personally from liability that your business can expose you to. So as an insurance person, you're thinking, what are all the products that can protect that person who's calling me on the phone? So up until recently, there's nothing really that you can offer them as far as that personal guarantee clause. So if the bank is politely knocking on the door, then that's what this policy will do and step in.
[00:15:42] Craig Arnatt: In rare circumstances, personal guarantee may not be required, but for the vast majority of loans, they are the de facto required. Lenders require it because it aligns incentives and gives them a backstop, of course. So it is not rare. It is the norm. And for most small business loans, the vast majority of acquisition financing in Canada, a personal guarantee is simply expected. So if you have a borrower to start, run or buy a business, odds are that you will have to be signing a personal guarantee.
[00:16:18] Craig Asano: And as an entrepreneur signing, putting your name, your house, your car, your assets, whatever you might have in that personal guarantee, let's break down the risk itself from that entrepreneur's perspective. What do they stand to lose in an example? Other than the obvious, the business would be required to liquidate assets, of course, to recover that loan payment. So, you know, the loan agreement will... What is the owner going to do? All they can do is liquidate, right?
[00:16:51] Craig Arnatt: So... The honest answer is that they understand in a way that we all understand that we should, you know, use dental floss. But in theory, that most moments of signing, they're not really. People hear about personal guarantee and think it's a formality. It is not a formality. It is putting real assets on the line. So the risk to the business owner is the entire personal balance sheet. Those personal assets will be required to be liquidated if the business is unable to fulfill that loan.
[00:17:23] Craig Arnatt: So everything outside the business, most people do not feel that there is that personal guarantee that until the The bank or the lender comes knocking and that's really the impact that we're trying to solve. So again, when I brought my brokerage, I signed a personal guarantee and honestly, I just had to do it because there was no way to avoid it. But it was scary, especially to my wife. We had to put the house up as collateral. So the burden is just like, I guess, metaphorically like a boat owner.
[00:17:57] Craig Arnatt: Your most exciting days of owning a boat is the first day you buy it and then the day you sell it. So a personal guarantee acts in a very similar way. You sign the loan and the excitement that comes with it. But it's always a great thing when you pay off the loan and you do not have that personal guarantee exposure. So until that time arrives, the PGI Cover is there to help. I like that analogy. It's like a sinking ship. It's like a pool. I look outdoors because I'm working from home today and it's the same thing.
[00:18:31] Craig Asano: When you get it, it's all exciting. And then every day it's a cost and you wish you never had it and hopefully fill it in. For someone who went through that experience as your own entrepreneur, you signed this for your mortgage brokerage. And being in the business to help solve the problem, what advice would you give to founders prior to them actually putting their name there? What do you think they need to know?
[00:18:31] Craig Arnatt: Well, I guess the obvious is whether you can repay the loan or not. That's obvious. Most founders are gung-ho and they see no downside at all.
[00:19:04] Craig Arnatt: I think the smart founders out there are going to look at what is the insurance policy doing at its core, right? If you have that liability exposure... And the worst case scenario happens, what's going to happen to you personally? So, again, I think it's very important that business owners understand that, you know, your liability policy is all about the actions of the business and your employees if they cause an accident or whatever. I mean, those traditional policies are there to protect the business or the personal impact of that.
[00:19:37] Craig Arnatt: Again, incorporating is defense line number one, and line number two is the insurance policy. So the advice really is to, as you're signing that loan, think about the personal guarantee, what the impact would mean to the family. and, and not, it's not just a loan, and find out if it is secured or not. obviously there are other aspects of joint or several who's on the guarantees that one person, many persons, what is exactly covered,
[00:20:08] Craig Arnatt: who is the signatoryy. So, you know, who is actually signing that loan agreement and who is the bank going to come calling to that person? Other things that are important is negotiating the cap. So some loans can have a cap of personal guarantee, others may not. So it depends on the lender itself. There's the different levels of lending, chartered banks, Canadian mezzanine financing, and then private financing itself.
[00:20:41] Craig Arnatt: As you go down the list from charter bank to private lender, obviously the private lenders are going to be a little more rigorous and a little more, I guess, aggressive if the loan is unpaid. So the advice is really just look at that personal guarantee, understand it. And then, you know, after you do understand it, then come to pgicover.com. So the and with that stack of lenders and the variance of their terms based on their loan contracts.
[00:21:13] Craig Asano: A default is a default and they're going to come calling you and that's it. Yeah. Yeah. It really is a timely product. I think there's a lot of movement in the markets that, you know, part of part of the research for the podcast and sort of moving on to the next section. We're sort of talking about the demand in Canada. You know, you're saying personal guarantees are required in almost all loans. But it has been here for eight years, eight years behind the UK somehow.
[00:21:45] Craig Asano: So as part of that research, Canada is entering, you know, this idea that there's, there's, it's a, it's a, it's a country with an older population now. I mean, I know we have immigration and there's a big hot debate about that, but a lot of the businesses and the business founders are getting older. And so usually a group would come in and get a loan and acquire that business and try to transfer those assets and, You know, that sort of business succession cycle. And, you know, can you like who do you feel that is going to demand for these products?
[00:22:19] Craig Asano: And why do you think it's important in Canada right now?
[00:22:19] Craig Arnatt: Yeah, it's a great question. And it is becoming very, very newsworthy. So Canada is staring down one of the largest business handovers in its history, right? There's an entire generation of owners that are retiring. A new wave of buyers and search funds, individual acquirers, M&A buyers. They have that ETA entrepreneurial through acquisition program. A process that is gaining momentum. So it is really stepping in to take, you know, when people come in and take that wheel,
[00:22:53] Craig Arnatt: they're inevitably going to have a loan that they're going to have to pay back. So, and almost all of them that are financing those purchases with debt. And so with that debt comes a personal guarantee. So you have a huge number of capable people buying good businesses, but they're putting up their personal net worth that is on the line. And one day before they even have learned where the light switches are, they're signing that loan guarantee. So that is exactly where this protection matters most.
[00:23:24] Craig Arnatt: It lets a buyer step in and deal without betting the family's security on a business that they're just getting into. And may not fully appreciate all the dynamics that are behind the scenes. So there is a huge potential for things to go sideways with an acquisition, of course. So where we're seeing in Canada is a growing trend where the sellers are also carrying the note for the purchaser. It's been a very ongoing trend in the US for a number of years. But in Canada, where we see the owners are having to retain ownership simply because the acquisition party doesn't have the funds or they're
[00:24:02] Craig Arnatt: only partial funding, this kind of thing. These sellers are still keeping that skin in the game. So I think that's why it's even more important and timely for this product to come along.
[00:24:02] Craig Asano: I understand that with business loans and personal guarantees, but are there other ways that this sort of product is going to evolve, like other use cases from a demand and need perspective? What are your thoughts there? Yeah, I think for our focus, we've really been just trying to identify with the core problem.
[00:24:36] Craig Arnatt: I'm a huge advocate of looking at other ways to venture out and to expand the marketplace and look at other different types of things other than loans. You know, there's other products that exist out there other than the Personal Guarantee Insurance clause, but such as transactional liability insurance, which has been around for a few years, which is another product that people may not be aware of, is that as a, there's one product from a company out of London, CFC, and they have a product that's pretty cool. It's from a seller's perspective.
[00:25:09] Craig Arnatt: If you're a seller of a business, The buyer comes along and all of a sudden they tank the business and whatever, so on and so forth. There's a number of things that go sideways there. So there is transactional liability insurance that protects the seller. But the common thread of a personal signature or guarantee is, to be honest, I haven't really focused on other aspects of it because we're trying to solve the core problem. But if any of my any listeners that are out there, you know, come up with ideas that we could look at, we're
[00:25:42] Craig Arnatt: all willing to have those discussions with anybody.
[00:25:42] Craig Asano: Yeah, that transactional angle, I can think of a variety of examples in our own experience that have come up over the years. So I think it's an interesting sweet spot to focus, I guess, insurance that's related. And it's exciting with all the technology capabilities coming into market and What can be underwritten there as well. But it's certainly an interesting space from a PGI Cover perspective.
[00:26:15] Craig Asano: You know, the Personal Guarantee Insurance that want to get into the more details in terms of the process and, you know, how it might work for a founder and, you know, working with PGI. And so, you know, if they've been approved for a loan, but it requires a personal guarantee, what's the next step? What do they do? Sure. So you can visit the website at pgicover.com and both a lender or a borrower can come and visit the site.
[00:26:46] Craig Arnatt: The flow is pretty simple. We will give you a quick assessment of the credit score just by entering the financial numbers of the business. No confidential information is needed as far as the company name or the person or the bank or the lender or that matter. We're just looking for the raw economic numbers. THANKS FOR JOINING US. And we will give an indication of whether the loan would be acceptable to underwrite. Our platform is using AI, so we're able to scrape loan documents and extract all the answers that we need.
[00:27:17] Craig Arnatt: So the user experience, we're trying to create a very smooth, streamlined approach to the application process. I hate filling out forms personally. So one of my core beliefs is trying to use automation as much as we can. In order to apply for the coverage. So the coverage is application process. Once that comes into the platform, it is underwritten using real people to look at the business, the economics, the environment,
[00:27:55] Craig Arnatt: the geopolitical aspects of where they're doing it and what they're doing. And then we come back with a quote within a couple of days, one or two days. And then we can provide coverage if they accept the terms of the policy. So in the materials here, I think maybe I read this online, that the coverage with the PGI Cover covers up to 80% of the guarantee. So as a founder, how should they think about that in practical terms?
[00:28:26] Craig Asano: What does that mean to them? Yeah.
[00:28:26] Craig Arnatt: Right, so coverage is currently available to million dollars and the retention or the deductible is 20%, which really acts to keep some skin in the game for the owner. The bottom line is that once the claim is settled with the lender, the policy pays the balance subject to the policy terms and conditions. So it's a pretty straightforward process. We're ensuring that personal guarantee attached to a business borrowing. And the policy just sits quietly in the background doing what most valuable things in insurance ever does,
[00:29:03] Craig Arnatt: which is do nothing right up until the day you need it.
[00:29:03] Craig Asano: And so that whole flow and the number or like the minutes, the hours, the days or however long, how long does that process take using AI? But you have human oversight, right? How long does it take to actually sign up and acquire this insurance? And it can be completely done digitally online? Yeah. Yes, absolutely. We can give an indication instantly. So there's a bit of a, yeah, it's a small widget that, again, you don't have to enter in any personal information in there.
[00:29:39] Craig Arnatt: You're just really looking at the raw economic numbers that you're looking at, your revenue, your overhead, the loan amount. We're going to ask you what the business category is, so the NAICS code. And then we'll be able to give you an indication right away. If the business is in a kind of a bad segment or some segments may not be qualifying, some pharmaceutical areas, cannabis, Bitcoin, there's some sectors that we just did not underwrite. But the indicator comes in very quickly.
[00:30:12] Craig Arnatt: It's just within a few minutes. And then the application process is a couple of business days. It's simply because it's not fully automated. We don't want to be taking an automated approach to this. We kind of want to understand who that business owner is, where they are, what they're doing, and take an honest assessment of that. So it is very much a human endeavor of the underwriting process, and that has to play through. Most of the times we're really trying to avoid back and forth because, again, I just really loathe that within the industry where some surprise question comes out of left field.
[00:30:47] Craig Arnatt: We're trying to cover all the bases, trying to make sure that every question that an underwriter is going to need is answered. So we look at the application as a number of gates that you can't get through unless the answers are there. So that's why we're trying to introduce the AI structure and that if something is missing, we can suggest a number of documents where that's going to be. Some loans actually have a separate personal guarantee system. Contract, a separate file, if you will. And so if something is missing from the original loan agreements that's not there,
[00:31:21] Craig Arnatt: the AI will suggest a certain kind of document you can try uploading. Everything is kept strictly confidential. This AI thing is running through an internal mechanism that's looking at trying to extract the answer. So it's trying to solve the number of questions. And once it gets all green on all the answers, then it can be sent off for underwriting. So the underwriting process is, again, that's a day or two, just because there is a person behind that underwriting. And then once that comes back with a quote, the indication of the premium,
[00:31:58] Craig Arnatt: the business owner or the borrower can accept that term right away. So our platform will guide them through that purchase workflow. They can sign up for monthly payments, pay for all at once. There's a number of different billing options that they can do. And then once that purchase is made, then the policy is issued right away. So there's no waiting and wondering what's going to happen with the policy issuance. It can be immediately bound. And coverage can be invoked right away. Well, that's good to know.
[00:32:29] Craig Asano: So it's all digital and about two days for the good human oversight that in 2026 we still cling on to. What about the costs? Is that a tricky question? The costs, you know, you're covering up to 80% of, let's say, a million-dollar financing, or maybe that's... That's a fair number. Maybe on the upper end of that scale, because your coverage goes up to a million, I believe you said earlier.
[00:32:59] Craig Asano: So what would the cost be to cover that?
[00:32:59] Craig Arnatt: Right. It is a huge variation on that cost, as you can well appreciate. Some businesses are more likely to have no problems versus others. So there's riskier endeavors, of course. And the price can widely vary between the amount of the loan and the personal guarantee. And so there's a number of factors that go into that pricing. Historically, you can look at, say, 1.8% to up to 3% of the guarantee. And that's really a ballpark for cost.
[00:33:34] Craig Asano: Yeah, that's fair, given the job that it's doing. And you hope it's just silent and you don't have to trigger it. But on that, if something bad happens, what are those triggers for a claim? And what is the claim process? Just to take this whole example right to both ends here. So what are the trigger claims and how would a claim work? Right. So in the loan, the technical term is a serious default.
[00:34:08] Craig Arnatt: That's where you get into beyond a month of not making the payment. And that is where you're getting the phone calls. So the serious breach of that loan agreement will be the impetus for the borrower may want to trigger that claim. It is important to note that buying the PGI Cover includes a number of benefits, even without the bank calling. We have a number of triage areas of the policy in the claims department that will lend assistance to a business owner.
[00:34:44] Craig Arnatt: So an example would be if a supply chain completely collapses and then there's a real problem with the business. We partner with a number of legal business advisors, accountants to look at that business structure, which kind of makes sense because the insurance industry or the insurance company doesn't want the claim in the first place. So we will make every effort to help that business owner weather a bad storm. Think of alternatives, talk with the lenders.
[00:35:17] Craig Arnatt: And so at the end of the day, where that claim is triggered, it is very much a negotiation with the lender to look at the big picture. So there'll be a negotiation of a claim to talk with the lender and discuss the business as a whole, discuss the liquidation of that business, if it's really coming down to it, where they need to liquidate. And then to provide comfort, the important aspect of the policy is to give comfort to the business owner. So if anybody's familiar with cyber insurance, it's treated very much a similar fashion is that cyber insurance isn't going to restore the data,
[00:35:56] Craig Arnatt: right? You can't put the genie back in the bottle if the data is compromised or you've been hacked. But what you can do is look at the restorative aspect of the claim. And so with cyber insurance, they're going to assure the customer that the company is taking steps to remediate any issues. They're taking all these steps and they're going to be doing this and that and so on and so forth. So with PGI Cover, it's done in a similar manner where the business owner isn't bombarded with a massive headache.
[00:36:28] Craig Arnatt: So it's going to take a lot of the pain And frustrations off their plate and give it to a claims department to deal with.
[00:36:28] Craig Asano: That's fantastic. I didn't realize that sort of level of support. I recognize that nobody wants it to happen, but to have that bridge of support and expertise will just help streamline in a difficult situation, a difficult time. So I think that's a great level of service in addition to the product. And, you know, so what are the other common misconceptions about, you know,
[00:37:02] Craig Asano: the coverage or how it works or what might be the top misconceptions? Let's see if we can alleviate some of them. Well, it's not a get out of business jail free card. So, you know, it's not going to pay off a vendor or, you know, kind of keep the business afloat. Right. There's there might be a misconception about Personal Guarantee Insurance. Oh, my business is going to stay in the game. It very much is that is predicated upon the calling of the loan itself.
[00:37:34] Craig Arnatt: It's gone beyond the business. It's now in the trajectory of that signatoryy, right? They're coming after that person. The business is defunct. There's no chance of restoration. And now they're coming knocking on your door. So the other misconceptions about it may be in a complicated process to get coverage. We're trying to make it very streamlined. We're trying to make it not a burden to get covered. It's not relatively expensive in the big picture of things. It's not personally, when you're thinking about structure of the premiums, it can be very much treated as a business expense.
[00:38:11] Craig Arnatt: so, you know, the reality is the cost of the coverage is small next to the thing that, that it really protects, which is the personal assets of that business owner, which is everything really, if you think about it at the end of the day, you know, a venture is, is only so good until that, that person is their personal assets are on the line. So that's what it's protecting. Yeah. The, the 1.8 to say 3% of, of the cost is, And the trade-off is you could lose up to the value of that loan that's being insured 100% of your personal assets,
[00:38:48] Craig Asano: which is the trade-off. So I think it's a good buy. I mean, insurance, I'm one typically, and I'll give you an example. When I buy a new washer dryer, they say, do you want insurance? And I'm like, oh, no, I don't need insurance. But my wife has got me on to, yes, you need insurance. And so-We have tapped into that insurance. Things break down. Things go go wrong. And at that point, you're like, man, I'm glad I've got insurance. And then I finally could find the documents. But no, so it's a good explanation of the restorative process, the recovery.
[00:39:25] Craig Asano: The support, but at the same time, how far, what it can do for you, but really what it's not as well, a little bit. I mean, the business still has an issue and, you know, tough decisions have to be made, but at least there'll be some protection of your personal assets, which is huge, I think, you know, these days. So, yeah. In this section of questions, the last one is really who's the ideal customer and who's like this product's not really for, who's the opposite.
[00:39:55] Craig Arnatt: So, you know, we can kind of get the message out to the right people who need it, who are going to benefit. And it's a right fit and it's a right product, product to market fit, as opposed to, you know, who's this is not really suitable for? Yeah. That's a good question. I think, you know, if I'm running an insurance brokerage and saying who'd want it, of course, I'm going to say, well, everybody would want it. Who wouldn't want that? So there's always that challenge to make someone identify with the need or to make them aware of it. I think the ideal customer, of course, is anyone who has signed that or is about to sign that personal guarantee.
[00:40:31] Craig Arnatt: I think in the big picture of things that have been with a weather storm, there's two aspects. Number one is do you have the wherewithal to liquidate your own business, be able to get out of that loan quickly. If you have a capital pool, you can pay that loan off. And you're willing to absorb that loss, then obviously the personal guarantee is not really worth it. You're just going to pay it and bite the bullet. On the other hand, there are more sophisticated buyers who, as I was earlier explaining about the hassles and the headache, honestly,
[00:41:05] Craig Arnatt: it's a big deal to deal with all that negotiation, the lending and all the phone calls and the harassments and all that kind of stuff. There is an aspect of some customers who just want to buy it just simply for the convenience. They may be able to afford it, but they just want to have that in their back pocket. So I think at the end of the day, it's going to work for anybody that's buying a venture that may be somewhat unknown or untested waters. As we were earlier talking about in the acquisition arena, you don't ever know what's really behind the scenes.
[00:41:39] Craig Arnatt: The vendor could be concealing something and there's a million things that can go sideways, of course. So I think at the end of the day, if you're in a business that has any uncertainty, whether it be supply chain or hidden risks, the most common thing to me, if I'm signing that loan agreement as a signatoryy, Why would I not want to take that policy and just put that in my back pocket? And again, when I was buying my brokerage, I just thought that it was a real pain point that had no solution up until
[00:42:14] Craig Asano: now. A little bit earlier in the show, you talked about an exclusion, which was crypto from, are there other exclusions? Or you said Bitcoin, but I'm assuming that's all crypto.
[00:42:14] Craig Arnatt: Yeah. Yeah. The exclusions are, well, not really technically with exclusions of the wording. Exclusion would be something like, you know, obviously fraud or illegal activities or no insurance policy to protect you from that. But there are certain industries that are untouchable as far as London capacity is going, right?
[00:42:49] Craig Arnatt: So when it comes to Bitcoin or crypto, that kind of stuff, it's very difficult to get that coverage. It's very speculative. That kind of thing can wipe a business owner out in a day, right? So with anything that's uncertain. And then, of course, legality of it. Cannabis has a lot of stigma in other countries. Obviously, Canada doesn't. But it's still a thing in other parts of the world, especially London, right? And then, you know, pharmaceutical stuff.
[00:43:19] Craig Arnatt: I mean, there's certain categories of industries that are kind of left untouched. But The encouraging part about this product is that we will look at startups. Even though a startup is the most riskiest venture that's out there, we will look at a startup as long as there is a funded element and they're revenue generating. We're not going to be looking at a startup that has no proven track record.
[00:43:51] Craig Arnatt: But for the big picture, we will look at any industry that is a viable, functioning, profitable business.
[00:43:51] Craig Asano: Okay. You know, that's all fair. So I want to talk a little bit about, you know, you mentioned earlier in the show about AI. And I know from our research, you call the kind of work that you've done on your product, the core, because I guess it's part of the core underwriting. But since you touched on it before, what I find more interesting,
[00:44:22] Craig Asano: Kind of very interesting for this next question is that in your bio, you talked a little bit about doing some work with the government on research on insurance related products and AI and large language models as well. Was there any interesting, what did you learn from that research that may be applicable to this conversation? And then You know, we can go from there. But really, it's a discussion around what sort of innovations, obviously, AI is a big part of that, that you
[00:44:54] Craig Asano: can see evolving the category. And, you know, what are your thoughts on that?
[00:44:54] Craig Arnatt: Well, the big takeaway is AI hallucinates. So I don't think it's surprising anybody. You know, the AI is not infallible, right? There's things that are going to go sideways. So we came up with the acronym CORE, and it's really just the Client Optimized Risk Engine. It takes inputs and it tries to guess at outcomes. It's really that simple.
[00:45:26] Craig Arnatt: And so we've adapted the core as an onboarding risk engine, which is the initial scoring of a risk. So instead of burying you in forms, you can upload the loan documents, balance sheets, so on and so forth. Certain documents are required to answer all these questions. So it reads the shape of the business, the boring, and it quickly tells us where the risk sits. So AI assistants are great at underwriting by doing repetitive reading or data scraping so that it helps underwriters make the decisions faster and they're
[00:46:00] Craig Arnatt: more consistent. So I think at the end of the day, AI is fantastic at parts humans find tedious and repetitive. And so generally bad things happen They're great at doing. so it'll analyze, you know, a hundred documents about complaining, right. And then, and completely miss the one piece of common sense that a person catches in seconds. So, so the magic is not AI replaced the underwriter. It's AI handing the underwriter superpowers and getting out of the way on that judgment call.
[00:46:31] Craig Arnatt: Yeah. So I think at the end of the day, our goal or our mission is to try to take the drudgery out of things when it comes to AI. It helps massively with the research. What's the trend lines out there? So I think in a time saving aspect, it's massively beneficial. But it's just a worry of letting these AI things take over in certain decisions or judgments. And that in itself has been a bone of contention with discussions.
[00:47:02] Craig Arnatt: Like you're thinking, oh, it won't be bias, right? It'll be completely honest. But sometimes that honesty can bring a very big risk. So sometimes bias, when it comes to humans anyways, can serve to cut down those losses, if you will. So I guess the AI, again, it can be beneficial to the workflows, right? But we still need the people to be really the gatekeepers, if you will, to make those underwriting decisions, the hard decisions,
[00:47:33] Craig Arnatt: and just put a personal spin on it. It's not always black and white. There's a lot of gray area with a number of businesses, of course, and the dynamics. AI can't guess the future, but it can completely help you understand the past.
[00:47:33] Craig Asano: Mm-hmm. Yeah, no, that's certainly fair. In the research, I saw the word embedded insurance as part of sort of PGI Cover.
[00:48:04] Craig Asano: And I'd like you to kind of Talk a little bit about that. What does that mean to you? And is this part of the embedded finance more about distributing the products? And is it an API? Is that the future? Everybody's going to be selling these products through their platforms?
[00:48:04] Craig Arnatt: Yeah. Yeah, it's interesting. When I first started getting insurance, so you remember Expedia had the travel insurance when you're checking out, right? Yeah. So I think most people recognize that that's what I call embedded insurance.
[00:48:39] Craig Arnatt: It's, you know, you're buying that washing machine, right? And at that moment of the impulse moment, you're trying to make that decision. Do I really need the insurance when I'm buying this? Oh, I never even thought of that. And that's a great idea. Yeah. To buy that coverage. So, you know, embedded insurance means the protection shows up at the exact moment you need it. That's inside that process, you're already inside. Instead of being separate, Aaron, you run later, never do or forget to do. The API, yes, the API is able to do that. So if it's a lending platform, there's a number of Fintech things that are out there, of course.
[00:49:14] Craig Arnatt: But so when it comes to the initial score or an indication, we can provide that right away to somebody on any platform. So we do have the APIs published that anyone can code into. And we'll be able to give that product offering to someone at that moment. So, you know, a founder is kind of maybe wondering, you know, you never even thought about that, that personal guarantee. In a lot of cases, deals collapse because they don't want to take on that risk. So when it comes to these platforms, the fintech platforms, I mean, it's very easy to offer someone a loan.
[00:49:50] Craig Arnatt: But if we are able to inject that solution, it hopefully will grease the wheels of these deals. And as an entrepreneur myself, I love those kinds of solutions where it's going to help someone overcome any hesitation. to execute a deal and and in all these kind of discussions that we've been having i've talked to business owners like man if i wish i had that before because i said no to a deal and you know so i think in in the big picture it's trying to solve a real problem and hopefully be very beneficial and economically to a entrepreneur
[00:50:29] Craig Arnatt: Who may hesitate? So if we can embed that offer inside systems, you know, it's one of those kinds of products that no one would probably specifically go seek out because they just don't even understand it's there or they don't know about it. So I think at the end of the day, the embedded solution is really key for us. We're very much willing to or looking forward to talking to partners in the fintech space and leverage our APIs.
[00:50:29] Craig Asano: So that is a good bridge to the referral program because who are the partners you're looking for and how maybe that referral program
[00:51:08] Craig Asano: that they can code into the APIs and it's like that point of sale insurance pop-up as part of the workflow. Who would be the ideal partners? Because some of them might be listening right today and how would it work from their perspective?
[00:51:08] Craig Arnatt: Right. So referral, the term referral in the US, it's one of those phrases that the insurance industry frowns upon. Up until recently in Canada, the referral mechanism has been frowned upon.
[00:51:45] Craig Arnatt: They don't want to be perceived as sharing premiums with a third party that has nothing to do with insurance. So it's a very tight fisted endeavor. And I think a number of years ago, brokers started saying, well, what's the difference between me paying Google X dollars a month for ad spend, right? And then they refer a customer to me because I'm giving an advertising company a bunch of money. So referrals are very much a thing nowadays. And these partners can get a referral fee for simply recommending the product.
[00:52:24] Craig Arnatt: We don't want to have any of our partners talking about the policy wordings. You don't want the insurance element of insurance. You're not legally allowed to start talking about coverage and things like that. That's the job of a broker. But we very much want to encourage anybody in the industry to come and talk to us and discuss how that can work. So in the sense of business mortgage or, you know, borrowing mortgage partners, agents who go out and seek funds for businesses,
[00:52:57] Craig Arnatt: those people are very much on the front line of borrower between borrowers and lenders. They're right in the middle. So that's kind of our sweet spot. And they should, you know, they should get... Rewarded for encouraging that product and it and it's going to protect that buyer the borrower from that impact so it could be lenders brokers fintechs accountants all advisors are a perfect fit for us because they are in the room with that when the personal guarantee gets
[00:53:27] Craig Arnatt: signed or they may be a part of that discussion So they're there to help their clients. They're adding value and they're sharing in the growth of that category. So everybody wins, especially the founders who get told that there is an option finally.
[00:53:27] Craig Asano: Yeah, it seems that a lot of this is awareness, you know, partner onboarding, obviously, you know, on the right side of what all the regulations that exist and whoever might be on the front line with their licenses to be
[00:54:00] Craig Asano: the suitable partners in this case. So from a... Because I recognize, I mean, we're... Our time's being burning through, but we've got a few more questions that we'd love to cover with you here. And one is sort of your vision for PGI in the future and maybe a bit about scaling this new category challenge and You know how the the strategy of what you you see there and you know how that's going to ramp up and and you
[00:54:36] Craig Asano: know what is it going to look like in you know three to five years and what would you call success because it's a big challenge but i think it's a big opportunity so it's it's a very interesting project
[00:54:36] Craig Arnatt: Yeah, so I think what excites me most is talking about a new product that doesn't exist. It is very encouraging when you're talking about that product and then there is an immediate identification with the need. And then this spills over to the earlier products that I mentioned about transactional liability.
[00:55:09] Craig Arnatt: So we want to position PGI Cover as a go-to entrepreneurial platform for insurance with not just PGI, but transactional. And the common products, commercial general liability, directors and officers, errors and omissions. These are all the core products that we're going to bring forward. So in the acquisition space, you're going to be acquiring a business and there's a lot of that and insurance uncertainty. So we want to be the go-to place where you can get certainty of transactions.
[00:55:41] Craig Arnatt: And we're trying to build a one-stop shop for the executive board of a business, both startups and well-established businesses looking to expand. And five years out, that's a good question. I think success is really where Personal Guarantee Insurance is a normal line item, not just a novelty. When a buyer is closing a deal, expects it. When a lender is offering it by default and when a founder somewhere keeps their home because they've had it, it makes us look good and helps businesses win and succeed and grow.
[00:56:16] Craig Arnatt: So even if we can make a few of those real stories happen, I think we've done a good job.
[00:56:16] Craig Asano: You know, we've talked a lot about the need and, you know, the product and how it works and all these great things. And, you know, you're excited to be in the category. And, you know, as a builder and insurtech builder here in Canada, what... You talked about expanding it to all the other more common insurance product lines, I guess.
[00:56:51] Craig Asano: From a technology perspective, because this is really a fintech show, what are you going to focus on building next from a fintech perspective that you think would be exciting to talk about here?
[00:56:51] Craig Arnatt: Right. So when you're talking about a personal guarantee application, I've looked through all the different products, and if you're thinking extrapolating that information to other areas, we're building a profile that's very easily extendable into other products. So I think in other areas that you're looking at when you're bombarded with forms and hassles and all this kind of stuff,
[00:57:29] Craig Arnatt: we're very much building a complete risk model for a business. And as AI grows and we're able to look at trends, we want to build in these kinds of key elements within the structure of that profile for a customer's dashboard that gives them an understanding of all that risk elements and then trying to provide those solutions. So if PGI has already been done, they've completed that transaction, What are the other areas that are going to bring them risk? And what are those easy solutions? And I say easy because, you know, in many years of the business, it's always a challenge to get information out of the customer,
[00:58:05] Craig Arnatt: right? It's like you're always chasing after, you know... Questions that come up and renewals and the harassment around the insurance. There's always that element of harassing a customer to complete answers and whatnot. So we very much wanted to take the strategy that build it once and then that can be extended into different areas. And then opening up those APIs for other platforms and to build that confidence into other areas of the business and be that one place where we can use technology in a very much advantage to us.
[00:58:39] Craig Arnatt: Streamlining, quoting, purchasing, and then making that risk analysis a complete picture for the business. I mean, it seems that a lot of, with the advent of AI and how it's sort of proliferating into everyone's lives, that personalized risk profile, individual or company, as you're saying, it is the future because once you have that built and it's continuously improving and layering new data based on all sorts of transactional
[00:59:14] Craig Asano: inputs, then You can start to suggest in a decisioning engine, Okay, well, we've seen this before. Why don't we get a little ahead of it and get yourself some insurance? Because it's going to happen everything all at once. And so I think it's a very smart play. And hopefully you get that bill before anyone else does, or there's maybe a shared model in the future. So that's an exciting day to look out for.
[00:59:48] Craig Asano: It's sort of like Robinhood, the company that is in BNPL payments and all these companies are expanding to be, again, all things of financial services. They're into the same business. Building personalized Fintech services for the family. And to do that, they need that same profile. So eventually everyone's building these profiles because AI wants to consume that data And then service up and match us into, you know, all sorts of interesting products.
[01:00:25] Craig Asano: And in this case, you know, PGI Cover insurance products, which I think is a very exciting goal to have. So on that note, I think we're going to move to our rapid fire questions, which sort of signal we're wrapping up and there's a little fun part of the show. So We're not expecting long, elaborate answers. We're just short, rapid fire questions. So are you ready? Okay, go ahead. These are questions that are kind of expecting rapid fire responses.
[01:00:59] Craig Asano: So let's go. What's one risk entrepreneurs spend too much time worrying about? Competitors. Most businesses are not killed by a rival. They're killed by running out of road or just internal issues, partnerships, issues, supply chain, that kind of thing. So a tight ship is probably the best thing that an entrepreneur can focus on. The competition. And then, you know, the flip side of that is what's one risk that they don't spend enough time worrying about?
[01:01:30] Craig Arnatt: Well, a personal guarantee, of course. Yeah. Yeah, I've learned a lot about the product, but it's the need and the triggers to that decision to say, yes, it's worth the 2% or the 1.8 to 3% because it's going to save me a whole lot of hassle in the future and I could sleep at night. And I think that's really where the rubber hits the road. It doesn't matter if you're a founder or what the insurance product might be for, but that's really what it's for now.
[01:02:02] Craig Asano: That peace of mind, right? So next question. What's one thing most founders misunderstand about insurance?
[01:02:02] Craig Arnatt: That is a cost. Good insurance is not a cost. It's a permission to take the risk in the first place. It's very much a risk mitigation product. And if you're thinking about the cost versus the impact that not having it can bring is a real challenge. Absolutely.
[01:02:33] Craig Asano: What's one tech trend in insurance that you're watching closely? And I will add that we haven't talked about yet in the show that much.
[01:02:33] Craig Arnatt: Yeah. Well, you know, I think AI is the trend that we're focusing on is really bringing the big picture, as I was mentioning before, about the whole thing. And so in M&A space, there is a lot of people who may be buying the business, have no idea about all the different aspects of that business that can bring them real problems. So I think the AI moving in the sense that it can be a trusted advisor.
[01:03:06] Craig Arnatt: And I'll tell you one more thing. I've decided to cover that aspect. We're seeing in a trend with insurance brokerages acquisition, you know, these big box companies come along and buy up all the mom and pop brokers. So in a lot of cases, you're missing that personalized advice that a broker brings. Insurance brokers, their job is really to inform. And the problem we're seeing this trend where these frontline agents are not understanding. They may be new. They don't fully understand the business.
[01:03:36] Craig Arnatt: They don't even know the person. So the business owner might not even know their agent's name anymore. So I think what we want to try to do is use AI in the sense of, okay, here's all the kind of stuff that's happened traditionally, and here's the things you should know. And then when it comes to the risk analysis of a business, the trends, the geopolitical aspects of it all, these things can play an important role in the M&A space, which I think will be very beneficial to the acquisition people that are out there. Mm-hmm.
[01:04:08] Craig Asano: Yeah, the bots will do the drudgery of data collection. Yeah, very true. What's one prediction you have for business lending over the next five years?
[01:04:08] Craig Arnatt: Prediction is that everybody who's lending money will know about our PGI product and recommend it. And recommend it. It's exciting. I think if you, if you, you're, you're first to market, there's a, an advantage, but there's also international jurisdictions have a lot of,
[01:04:38] Craig Asano: experience and, and transactional data, that have been built up. So I, and it sounds like that has been, you know, working. So there's no reason why I can't work here in Canada, which is, A remarkable thing. But before we move to the close, is there anything you'd like to, you know, that we might have missed or that you'd like to cover or you'd like to leave the audience with as we move to close the show?
[01:04:38] Craig Arnatt: I think we covered a lot of good ground. Just maybe how to reach out to us.
[01:05:09] Craig Arnatt: Is that is that up next or should we? Well, absolutely. I mean, like I know you talked about PGI Cover, but and we'll put up links in the show notes when we publish this and and put it online. But yeah, how do they contact you? Sure. The easiest way to contact us is to visit the pgicover.com. You can see all the documents and we have a pretty extensive blog talking about different aspects of the product and see if it's a fit. And the process of getting that initial score is online there, of course.
[01:05:45] Craig Arnatt: But I also love talking directly with people. So you can reach me directly through my email at craig at pgicover.com. I'm also on LinkedIn, as well as x at craigarnatt_pgi.
[01:05:45] Craig Asano: Yeah, yeah, absolutely. So, yeah, no, Craig, it's been an excellent conversation. As always, I've learned a lot. I want to thank you on behalf of the NCFA community and all our listeners here about sharing your expertise. And you're welcome, you know, anytime in the future.
[01:06:18] Craig Asano: So it's been great. It's been great. So any last thoughts? Nothing. It's always a tough thing because after an hour's conversation, there's almost not much more to say. But, you know, I just want to say we do welcome you back in a few years time and what we're going to check in and see the growth, the traction, see what you've built based on, you know, that that original vision, if that's Okay with you. Absolutely. I really appreciate your time having me on.
[01:06:49] Craig Arnatt: And I do look forward to, to connecting with you in the future and hopefully we can talk about our, our trajectory in Canada and how we're helping the, helping the entrepreneurs win out there.
[01:06:49] Craig Asano: Yeah. And if any, you know, potential partners for PGI Cover or founders, that might be interesting product. Please do get in touch with Craig Arnatt. He he's a, You know, wealth of information and sure tech. And he has this incredible product that you absolutely need. So with that, I will just say if as we close the show, if you're new to Fintech Fridays, please check out some of the incredible past episodes, which are all up on the site. And we look forward to seeing you next Friday for another episode of Fintech Friday. So have a good weekend, everyone. Thank you. You've been listening to Fintech Fridays, brought to you by NCFA and Partners. Tune in weekly for the latest Fintech Friday podcast by subscribing to this channel. The National Crowdfunding and Fintech Association of Canada is a nonprofit actively engaged with social and investment Fintech sectors around the globe and provides
Outro : you've been listening to Fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and Fintech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit ncfacanada.org.
The 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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June 10, 2026 | NCFA Story Intelligence | Capital Markets And Funding

On June 8, 2026, OpenAI confirmed it submitted a confidential S-1 to the U.S. Securities and Exchange Commission. One week earlier, Anthropic disclosed its own confidential draft registration statement for a proposed IPO.
The filings are the trigger, not the story. The story is how frontier AI moves from research labs and safety debates into consumer adoption, cloud alliances, investor conviction, copyright fights, government interest, near trillion dollar private valuations, and the public market gate.
OpenAI starts with a promise that sounds almost incompatible with public markets.1 In 2015, it begins as a nonprofit AI research company with a mission tied to broad public benefit, not shareholder return. That tension does not matter much while the work sits inside research circles. It matters once OpenAI becomes strategically important.
Anthropic comes from inside the same argument.2 Founded in 2021 by former OpenAI researchers, including Dario Amodei, Anthropic builds its identity around reliable, interpretable, and steerable AI systems. It is not just another model company. It is a different answer to a question OpenAI helped make unavoidable.
ChatGPT turns frontier AI into a public habit.3 The late 2022 launch changes the audience almost overnight. Students, founders, developers, workers, executives, and investors start testing advanced AI directly. Reuters later reports ChatGPT reached an estimated 100 million monthly active users in January 2023.4
Claude takes the quieter enterprise path.5 It does not create the same consumer spectacle, but Anthropic leans into reliability, predictable deployment, and safety as commercial positioning. Trust becomes part of the product, especially for organizations that need governance controls before they scale AI usage.
Microsoft turns OpenAI into one of the largest strategic bets in technology.6 The relationship gives OpenAI more than capital. Azure becomes part of its operating foundation, with cloud infrastructure, enterprise distribution, and credibility arriving at a moment when many buyers are still trying to understand what generative AI can become.
Anthropic attracts a different group of believers. Google backs the company. Amazon commits billions and makes Anthropic central to its AI strategy, while AWS becomes Anthropic's primary cloud and training partner.7 Spark Capital and Menlo Ventures remain part of the journey as Anthropic grows from safety focused startup into one of OpenAI's strongest challengers.
OpenAI remains the company everyone else measures against. ChatGPT gives OpenAI distribution, developer attention, and brand recognition. Microsoft's partnership gives it reach into enterprise software. That combination makes OpenAI powerful, but it also makes dependency risk more visible for large buyers.
Anthropic becomes strategically useful because it is different. Claude's role in enterprise productivity and financial workflows shows how a trust first product can become a real alternative. When Microsoft brings Claude into Office productivity, the message is practical: even OpenAI's most important partner wants more than one AI supplier in the stack.
OpenAI's success creates a new constraint. The company is no longer trying to prove that people will use frontier AI. ChatGPT already answered that question. OpenAI now has to fund the compute, deployment, developer usage, and enterprise adoption needed to keep the flywheel turning.
Anthropic faces the same pressure through Claude demand. Its Series H announcement points to global enterprise adoption, expanded compute capacity, Amazon, Google, Broadcom, SpaceX, and chip partners including Micron, Samsung, and SK hynix.8 The company's careful brand does not reduce its need for industrial scale infrastructure.
OpenAI's rise brings copyright and publisher pressure with it. The more useful the models become, the more valuable the training inputs appear. News organizations, authors, artists, and creators increasingly ask how their work contributes to model capability and who captures the value created from it.
Anthropic faces the same ownership question through Reddit. The Reddit lawsuit against Anthropic puts training data claims, platform rights, and AI accountability into the story. The issue is not only whether AI can learn from the web. It is who gets a say when web content becomes commercial fuel.
OpenAI's control questions become public in 2023.9 The board removes Sam Altman, then reverses course after pressure from employees, customers, investors, and partners. The episode is brief, but it changes how people read the company. Governance becomes part of valuation risk.
Anthropic's safety stance faces real world tests. Its product identity is tied to reliability and responsible deployment, but governments, enterprises, and defence buyers want more capability. The tension between safety commitments and state power is already visible in AI ethics, state power, and red lines.
OpenAI's March 2026 financing makes the capital story impossible to ignore.10 The company closes $122B USD in committed capital at an $852B USD post money valuation. The round is anchored by Amazon, NVIDIA, and SoftBank, with continued participation from Microsoft. SoftBank co leads alongside a16z, D. E. Shaw Ventures, MGX, TPG, and accounts advised by T. Rowe Price Associates.
Anthropic's May 2026 Series H shows the same private market scale.11 The company raises $65B USD at a $965B USD post money valuation. Altimeter Capital, Dragoneer, Greenoaks, and Sequoia Capital lead the round, with Capital Group, Coatue, D1 Capital Partners, GIC, ICONIQ, and XN also co leading. Amazon's prior commitment remains part of the picture, along with Google, Broadcom, SpaceX, and chip partners.
OpenAI follows on June 8 and keeps timing open.12 The company confirms it submitted a confidential S-1 but says it has not decided when to go public. Public markets become an option, while OpenAI keeps weighing what may be easier to do as a private company.
Anthropic reaches the IPO gate first on June 1.13 The filing does not set share count or price. It gives the company the option to move after SEC review, market conditions, and other factors.
Different origins. Different philosophies. Different investor groups. Different commercialization paths. Yet both companies arrive at the same gate.
The IPO filings don't end the frontier AI story. They mark the point where a decade of research, product adoption, infrastructure buildout, governance conflict, investor conviction, and public policy pressure begins meeting public markets.
For NCFA, this is where Story Intelligence connects to the Financial Innovation Map. The opportunity set includes private market liquidity, tokenized pre IPO access, AI infrastructure finance, prediction markets around IPO timing and valuation, disclosure standards, and investor protection for companies that may become public only after private markets have already priced much of the upside.
OpenAI and Anthropic followed different paths, attracted different allies, and made different decisions along the way. Yet both arrived at the same gate. That may say as much about the economics of frontier AI as it does about the companies themselves.
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