Canada is steadily racing for the FinTech crown in the Americas. Canada, the birthplace of Ethereum, has around 850 FinTech firms (as opposed to the US accommodating 5000) and is aiming to grow the ecosystem, even more, to compete with other established markets.

Listed among the top 20 of the Global Financial Centers Index, and hosting major events like the Canada Fintech Forum, Montreal is continuing to grow as a hub. Creating a prominent meeting spot for the FinTech community, Holt Accelerator aims to support Montreal by gathering the top talents not just from Canada, but all around the world in Montreal. Defining itself as the “Tinder of FinTech,” Holt brings different sides of the global FinTech ecosystem together, creating a viable environment for exchange and collaboration.

Every year, Holt runs a 12-week program for selected FinTech and RegTech start-ups and is currently getting ready to welcome its third batch. Jan Christopher Arp, the Founding Managing Partner of the Holt, accepted to talk about the Canadian FinTech landscape and their program during these tough times, supporting our mission of keeping the entrepreneurs motivated during quarantine:

  • Jan, thanks a lot for sparing some time during this extraordinary phase we are going through. Can you help us get to know you and the Holt Accelerator? As far as I know, Holt Accelerator is backed by Holdun, a rooted and well-connected family office. Why did the Holt family choose to invest in the FinTech vertical?

The Holt family is based upon the legacy of Sir Herbert Holt, and immigrant to Canada, and during the early 1,900’s, became the director of some 250 companies, was the longest serving chairman of the Royal Bank of Canada, and was knighted by King George V. The family’s history in finance has continued through five generations, now lead by the multi-family office Holdun Family Office.

Fifth generation, great-great-grandson Brendan Holt Dunn, was investing directly into startups, and indirectly to early stage funds, which eventually lead to an investment in the LeAD Sports Accelerator by the Adidas family. This investment inspired Brendan to launch his own accelerator in finance. I joined Brendan, whereby at the time, I was building Canada’s very early stage fintech grassroots movement through Fintech Cadence, while leveraging my experience as an early stage CFO-for-hire in which I facilitated the financing rounds for 12 companies who raised a total of $15M. Together we set out to solve fintechs greatest early stage problems – landing customers and raising sufficient capital to execute for those clients. 

  • What are some essential facts we should know (and won’t be to able find on Google) about the Canadian FinTech ecosystem? Why should the FinTech entrepreneurs consider Canada as a settlement place?

Canada’s economy is very stable, with a solid balance sheet and willingness to support during crisis periods like we face today, resulting in international investors looking very favourably at investing in Canadian base companies. As such, it’s a great springboard into North America.

More specifically, Canadians are very welcoming to immigrants and entrepreneurs, and our program can fast-track immigration and incorporation. Furthermore, Canada boasts some of the world’s best talent, especially in data and AI, which is instrumental to every fintech startups technology roadmap. While the talent is valuable, the cost of talent is incredibly affordable, given major hubs like Montreal are 50% cheaper than a New York, and development tax credits can subsidize up to 80% of all development work.

From a Fintech perspective, there are over 1,000 Financial Institutions willing to adopt Fintech solutions, especially now more than ever considering the shift to digital. While a big enough market to establish a billion-dollar venture business, it’s small enough to get in front of the key decision makers in order to validate your value proposition and capture the market once validated, especially through our program.

  • Canada has been embracing cashless society goals, and according to the research by the Retail Council of Canada, only 15 percent of retail consumers regularly pay with cash. This adoption rate is already quite advanced, compared to other countries. What’s the next wide-spread innovation for Canada?

There’s much innovation on the horizon including:

  • Payments Modernization: Payments Canada is responsible for the clearing and settlement infrastructure, processes and rules essential to those transactions. They have launched their 2019-2023 corporate plan, that included (among other things):
    • Lynx: A modern high-value payments platform that is fast, sound, secure and resilient, replacing the current Large Value Transfer System (LVTS).
    • The Real-Time Rail (RTR): The provision of irrevocable, immediate funds payments 24 / 7 / 365.
    • Automated Clearing Settlement System (ACSS): Regulatory enhancements to improve system resiliency and functionality.
    • Settlement Optimization Engine (SOE): The roadmap to replace the existing retail batch payment systems with a centralized retail batch payment system.
  • The Bank of Canada has been exploring blockchain, distributed ledger technology and digital currency, through their world renown Jasper projects, resulting in Canada emerging as one of the world leaders. Canada has recently postponed a Canadian backed digital currency launch; however, has stated it’s prepared to enter the space if other nations adopt this strategy, which is likely to be re-evaluated considering the current times. Canada already distinguishes digital assets as securities, resulting in these assets being taxed appropriately, and thus laying the regulatory framework for blockchain / crypto companies to build from.
  • The Department of Finance Canada completed reviews and consultations on the merits of open banking and has been exploring the best approach for Canada to enable and regulate open banking technologies. We expect some form of regulatory advancement here within the next 3-5 years, with provincial governments like Quebec already moving forward with measures that more resemble data privacy rules in Europe, although Canada does currently trail European counterparts who are leading the way globally. 
  • How does the regulatory landscape favor the FinTech start-ups in Canada? Does the regulator actively support FinTech start-ups? Are there any initiatives for European or Asian FinTechs that are aiming to expand into Canada?
  • Canadian provincial security regulators are joined together through a centralized regulatory body called the Canadian Securities Administrators, enabling a streamline passporting of licensing requirements across the country. Additionally, many of the major provincial regulators have also created sandboxes, empowering them to trial differing fintech business models and technologies that in a protective manner that promise to better serve society.
  • Furthermore, these provincial regulators are connected into GFIN, The Global Financial Innovation Network (GFIN), a network of 29 worldwide regulatory bodies (including Europe and Asia). GFIN is creating a global framework for collaboration between regulators, while allowing them to ensure innovative ideas and new technologies are focused on compliance. GFIN has opened applications for its cross-border testing pilot, and given Canada’s role in GFIN, this ensures Canadian fintechs will have a right participate.
  • Let’s talk a bit about your 12-week start-up program. What’s the program scope and aim? What kind of start-up are you looking to attract?

Our primary purpose is to orchestrate deals for our startups, whereby previously we orchestrated in 30 deals, for our 18 active portfolio companies, half of which were with financial institutions as customers, and the other half with institutional investors. As we know and track the needs of our 300 Advisors who represent over 40 financial institutions and an even greater number of investors, we remain bullish that certain financial institutions will adopt technologies that allow them to accelerate into the digital era, while institutional investors will continue to invest and back the best companies (ie. those selected in Holt Accelerator). As such, we are seeking companies that best respond to the needs of our Advisors, our alumni and the Holdun group of companies.

  • What can the participating start-ups expect to get from the Program? Can you point out a couple of the former cohort participants?

While we aim to make deals happen for each participating startup in the cohort, this ultimately provides the startup with a) initial seed capital with potential for follow-on, b) an enlarged network of fintech professionals who represent financial institutions, investors or experts, c) substantially refined value proposition pitch (customer and investor),  d) massive visibility and credibility among the international fintech community, e) establish yourself in the North American market (including incorporation, immigration support and access to talent).

Some notable examples include:

  • Owl Labs (Canada)
    • Facilitated several customer deals include with Fairstone Financial.
    • Engaged lead and strategic investors into their $2.4M round post program.
  • Fundseeder (U.S.)
    • Facilitated their first customer deal and supported with incorporation and immigration into Canada.
    • Engaged several strategic investors into their most recent close.
  • MarketsFlow (U.K.)
    • Facilitated several investor participations in upcoming crowdfunding campaign.
    • Supported in product (ie. new product launch) and international development (ie. entry to new markets).
  • I believe the initial Program kick-off was planned for July 27th. In the light of the current events, how do you plan to coordinate the Program if the quarantine measures extend until mid-summer?

Our entire program will be online, with an option to participate physically for those that want to maximize the relationship and network building. This would include our flagship Selection Day featuring 100+ of our top Advisors would speed-date our top candidates online, video conferencing for connecting with our Advisors and weekly calls, our cross-Canada roadshow conducted virtually, and where appropriate, establishing the company in Canada.

The application for Holt Accelerator’s 12-week Program is still open to early-stage startups from all around the world! The application deadline is May 9th at 11:59 pm (EST) – click here for more information.

Gazi University Faculty of Law graduate Ş. Elif Kocaoğlu Ulbrich has degrees in Private Law from Galatasaray University and MBA from WHU – Otto Beisheim School of Management, and is also a fellow of Jean Monnet, Joachim Herz Stiftung. After working as a lawyer in various international law firms in Istanbul and Ankara for more than six years, Denizbank A.Ş. He started his banking and finance career in 2013, specializing in business development, project management, FinTech regulation and lobbying activities at FinTech startups (FinLeap, Cringle, Lendico) in Hamburg and later in Berlin. Co-author of The PAYTECH Book, The AI ​​Book and The LegalTech Book, which are planned to be published in 2020 in cooperation with FINTECH Circle and Wiley, Kocaoğlu Ulbrich has been providing consultancy, training and publishing services since 2019 through Berlin-based Contextual Solutions, which she is the founder of.