Float Financial Secures $48.5M Series B Funding

Float Financial Secures $48.5 Million in Series B Funding

Float Financial, a startup specializing in expense management and corporate cards, has successfully completed a Series B funding round, raising $48.5 million. The company primarily serves the Canadian market.

Focus on Canadian SMBs

Headquartered in Toronto, Float Financial positions itself similarly to prominent U.S. fintech companies like Brex and Ramp. However, its core distinction lies in its exclusive dedication to serving Canadian Small and Medium-sized Businesses (SMBs).

CEO and co-founder Rob Khazzam emphasizes that Canadian SMBs have historically been underserved, citing Canada’s concentrated banking sector and challenging economic conditions as contributing factors.

Investment Details

Goldman Sachs Growth Equity spearheaded the financing, with significant contributions from OMERS Ventures, FJ Labs, Teralys, and existing investor Garage Capital.

This latest funding brings Float Financial’s total venture capital raised to US$92.6 million since its establishment in 2020. Furthermore, the company secured a $36.9 million credit facility in February 2024, utilized to provide credit offerings to its clientele.

Valuation and Financial Growth

The company has chosen not to disclose its current valuation, only confirming that it represents an increase from its previous US$30 million Series A round, which was led by Tiger Global in November 2021.

While specific revenue figures remain confidential, Khazzam reports a “50x” increase in revenue and a 45x surge in total payment volume since the Series A funding. Assets under management have also grown substantially, experiencing a 30x increase. Currently, the company is operating at a loss.

Expanding Product Suite and Customer Base

Float initially launched its core product in May 2021. Since then, it has progressively broadened its services to encompass bill pay, high-yield accounts, accounts payable automation, and both Canadian and U.S. dollar denominated virtual and physical cards.

The company’s customer roster includes over 4,000 businesses, such as Jane Software, LumiQ, and Knix.

Addressing Market Perceptions

Khazzam directly countered recent narratives suggesting that Canadian businesses are not attractive investment targets.

He stated that the Canadian SMB landscape is “rich and diverse and chock full of potential,” and that a uniquely Canadian approach is essential to meet their needs. He believes the financial system must evolve to support the growth and competitiveness of Canadian businesses.

Future Plans

Float intends to allocate the newly acquired capital towards further product development and expansion of its regional footprint within Canada. Continued hiring is also a key priority.

Industry Perspective

Laura Lenz, a partner at OMERS Ventures, highlighted Float’s proficiency in navigating the Canadian regulatory environment and its deep understanding of the local market as crucial elements of its success.

“It takes someone intimately familiar with these nuances to be able to create a product that works,” Lenz explained. “As investors with strong Canadian roots, we know there is an urgent need for banking infrastructure that helps Canadian businesses keep pace with their U.S. counterparts and remain competitive on the global stage.”

Note: Following initial publication, Float Financial clarified that the funding amount was actually C$72 million, equivalent to US$50 million.

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