Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Narwhal Project: Growth Insights from the Class of 2014
Scale-up Research | Dec 18, 2024
Image: The Class of 2014 (Narhwal project, Charles Plant)
Scaling Canadian Fintech and Lessons from the Narwhal Project Class of 2014
Ten years ago Canada’s tech sector had launched 260 startups that had raised at least $500,000 in what became known as the "Class of 2014" (14 page PDF). These companies not only showed early promise and were supported by the ecosystem at the time to kickstart their journey.
Charles Plant, founder of The Narwhal Project and an expert in scaling companies analyzed how the class of 2014 performed over the past decade, comparing their progress with international comparators like the U.S., UK, Israel, France, and Germany to gain deeper insights into the wins and struggles of Canadian startups. For fintech entrepreneurs, these data-driven insights offer powerful lessons about the art of scaling. This article explores strategies to scale in today's competitive global market.
Strong Start, Weak Scalability
It's certainly not the first time you've heard this about Canada's entrepreneurial ecosystem including in fintech - see Canada's innovation paradox: strong start, missing impact. Or dare I say like the Toronto Maple Leafs!
So here's the good news. The data analysis confirms that Canadian startups are good at raising early-stage funding (think Pre-seed, Seed, Series A). The Class of 2014 companies raised an average of $30 million each, which outpaced many peers in the study including France, Germany, the UK, and Israel yet lagged the U.S. with average funding of $49.4 million per company. Fintech founders should feel optimistic about Canada being a strong environment for early investors (includes government).
See: Tipalti Expands Canadian Operations with Localized Solutions
But here’s the catch. Only 8.4% of these companies successfully closed a Series B funding round. That’s the lowest success rate among the countries studied and well behind Israel (16.6%) and the U.S. (13.9%). Series B is really where the rubber hits the road for many of these companies who scale aggressively by hiring talent, entering new markets, strengthening their competitive tech stack and operations.
Fintech growth often depends on scaling the acquisition of new customers and successfully navigating complex markets but the inability to rise Series B is a serious challenge that goes beyond funding and points to systemic problems, such as over reliance on government grant funding, lack of sales and marketing, smaller domestic market, and then there's the so called risk adverse culture - they all need to breakthrough and change.
20% of the Class of 2014’s top companies relied on grant funding in their last raise, which was more than double the rate of any other country. Use grants as a springboard, not a crutch, as you are operating in a competitive and market driven environment.
Fintechs Need Better Sales and Marketing
Canada’s startups don’t fail because they can’t innovate. Almost 95% of the Class of 2014 had the technical chops to build compelling products and secure Seed funding but the issue was around commercialization. They couldn't take those products to market with the save fervour as their peer countries. Many companies failed due to lack of product-market fit, couldn't identify large enough markets or couldn't market effectively/efficiently.
See: Key Findings from 2025 Advanced Payments and Fintech Survey
Fintechs need to understand that to grow, they need top customer acquisition strategies, build trust with users, and strike key partnerships with established players like banks, payment networks, enterprise platforms, or ecosystems. They should not neglect to prioritize targeted, data-driven, sales and marketing from day one. If they aren't selling, they aren't iterating.
Global Expansion An Opportunity or Distraction?
Canada is a small market. Fintech startups know this better than anyone and often look globally for expansive growth but the Narwhal Project’s data shows why this isn’t always straightforward. While global markets can be lucrative, they are also highly regulated, diverse, and competitive. Take payment preferences for example. In Asia, QR codes currently dominate. In Europe, open banking laws encourage innovation and competition. In Canada, entrenched incumbents without much competition make disruption harder. Expanding without understanding these nuances can derail growth.
Fintech firms should approach global expansion as a pilot or phased rollout instead of all or nothing. Look for regions that align with your product/service offerings, such as mobile-first banking solutions for regions with large underbanked populations such as Africa or Southeast Asia. Always localize, meaning integrate with regional payment systems, learn the local cultural attitudes towards money, and build compliance frameworks for each market.
Underwhelming IPOs and Acquisitions
Canada lags in both IPOs and acquisitions. Only 2.2% of the Class of 2014 went IPO and listed on senior exchanges versus the U.S. (3.1%) and Israel (4.4%). While five Canadian companies went public on major exchanges, their average funding was just $57 million compared to the U.S. average of $364.4 million per IPO.
See: As AI-driven IPOs Take Center Stage, What Could go Wrong?
The acquisition story is similar. Only 10.4% of Canadian startups were acquired compared to 21.8% in Germany. Further, the average pre-acquisition value of Canadian companies was $12.8 million compared to $37 million global benchmark. This points to startups selling out early or missing the opportunity to grow into market leaders.
Fintechs should focus on long term value creation and instead of giving into the pressures of selling out early, founders should cultivate relationships with investors that can provide follow-on later stage funding to give the company a longer scale-up runway and unlock bigger exit opportunities. They can look to private markets. Also, organic growth is arguably underrated in fintech. In the current economic climate, fintechs are relying less on aggressive fundraising to fuel growth but are focused on profitability and revenue-first growth which attracts higher quality and deeper investors.
Takeways Fintech Growth
The Class of 2014 is like looking into a mirror as it shows Canada's strengths and weaknesses in tech, and fintech is no exception. The data shows a better playbook and pathway forward:
- Make sure your product solves a real problem for a large audience and build a business model that can grow over time before expanding too quickly.
- Invest in strong sales and marketing teams to reach the right customers and grow your market share.
- Expand internationally step by step, using data to guide decisions and adapt to local needs.
See: BoE Report: Open Banking Boosts Productivity, Competition
- Grants are okay but combine with private funding to stay competitive and set up for long-term growth.
- Focus on building a company that grows long term value and aims for bigger milestones instead of selling (out) too early.
Canadian fintechs have the potential to lead on the global stage. The challenge is clear but so is the opportunity.
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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