After one of Canada’s biggest-ever tech exits, two former Wave Financial executives unveiled their new decentralized-identity startup Thursday with backing from some big-name investors. Here’s what you need to know:

It’s French for “who”: Qui Identity is the brainchild of Kirk Simpson, co-founder of fintech Wave Financial, and Peter Carrescia, a former founding managing director at OMERS who later joined Wave as a senior vice-president. Wave sold to the tax-preparation firm H&R Block for $537 million in 2019, a deal that remains a landmark in Canadian tech. (Wave’s other co-founder, James Lochrie, has since launched his own VC firm, based out of Calgary.)

On Thursday, the pair announced the completion of Qui’s $6.5-million seed funding round led by Round 13 Digital Asset Fund, with participation from OMERS Ventures, Loblaw-linked Wittington Ventures and some “prominent” angel investors whom the company declined to identify. 

Why it matters: Qui is the latest startup to raise money in a bid to establish itself in the nascent blockchain-enabled identification space.  

Carrescia told The Logic he sees “so much opportunity” in decentralized-identity technology because it offers users a secure, self-controlled space to store personal data without relying on companies like Google.

In a statement, Round 13 Digital Asset Fund managing partner Satraj Bambra said he believes “decentralization provides compelling advantages over traditional centralized web approaches and no more so than in the area of identity.”

How does the tech work?: It’s essentially a secure digital wallet where users can store all kinds of personal information: their name, home address and employment info, credit-card numbers. It would use a cryptographic key for verification instead of a password. Rather than set up countless accounts with food-delivery apps, banks and streaming services, users would hold their personal information themselves and then transmit it to third parties as needed. 

Qui’s press release says identity tech could eventually be expanded to include things like receipts for the assets people own, either physical or digital. 

Who are they up against?: The decentralized-ID space is still in the early stages, but the money is starting to flood in.

In April, the identity startup Spruce Systems raised US$34 million in a deal led by Andreessen Horowitz, following its US$7.5-million seed funding last year. Salt Lake City-based Trinsic, another digital-identity service provider, recently raised US$8.5 million in seed funding backed by Toronto investors Georgian. Trulioo, a more established digital-identity provider based in Vancouver, raised $60 million in Series C funding, with Goldman Sachs as the main investor. Calgary-based Credivera provides credential-verification services for things like workforce training. 

What’s next: Qui will use its seed funding to bring on new staff, and is aiming to release its first product in the first quarter of 2023. 

Simpson said the technology could be particularly useful in eliminating the “friction” involved in verifying information, for example when people are applying for mortgages or financial services that require background checks. 

He said he witnessed the struggle of client verification at Wave Financial, where they would have to independently verify thousands of small businesses in order to provide them payroll or other services. 

“We saw that pain firsthand,” he said.