MONTREAL — Wealthsimple has undergone a major shift in strategy since last year, when it exited both the U.K. and U.S. markets in order to focus on Canada, and raised $750 million from investors including international players Meritech and Greylock. As it looks to compete with Canada’s largest banks for retail customers, the Toronto-based fintech has been investing in new products spanning tax, crypto, investing, stock trading and payments. At the same time, the company is contending with a market downturn that has hit fintech startups particularly hard, prompting layoffs and other cost-cutting measures at many companies.

In an interview with The Logic, CEO Michael Katchen discussed how he plans to steer one of Canada’s most prominent tech startups through the turbulence. Among the company’s immediate plans is an entirely rebranded offering that combines all of its different products in a single mobile app, which it expects to unveil at the end of this month. Katchen also discussed the potential for consolidation in the sector, Wealthsimple’s new products and features and the status of its plans for an IPO.

This interview has been edited and condensed for length and clarity.

The macro environment has changed for tech companies, and investors have been concerned about growth and inflation. How do you see Wealthsimple adapting to that? What is your plan for taking the company through that period?

It’s a very different year than the last few, no question about that. I’d say that we are incredibly well positioned. We raised a huge round of funding in the last year, and have always prepared for a moment like this. We knew we would hit a market like this at some point. And I think we are going to have to be as thoughtful as everybody else is. 

The funding environment is less open than it’s been in a long time. The next couple of years could be really tough for tech players in general. And for companies that did not have the chance to raise before this environment set in, I think they’re in rough shape. We’re very fortunate to be on the other side of that. I think that could create exciting opportunities for a business that is thoughtful and patient and disciplined. But it’s going to be tough for a lot of our industry.

What kinds of opportunities?

There could be M&A opportunities, partnerships. I think you’ll find that companies that are less well capitalized, less at scale, that are unable to raise the next round of funding to keep growing, might be looking for different options for partners, for consolidators. And Wealthsimple, given our scale, given our breadth of relationships and products that we have with customers, I think we’ll be a natural platform to do those sorts of things.

Do you see yourself having to lay off employees, like other companies have done?

We still have open roles that we’re filling right now. I think that what I would say is we’re operating in a highly uncertain environment. I wouldn’t want to take anything like that ever off the table and back ourselves into a corner. But right now, you know, we’re in an extremely healthy financial position. We’re still hiring, but in a much more disciplined way.

You’ve talked about wanting to pursue an IPO in the near future. What’s the current status of those plans?

It’s definitely still on our roadmap, but not where we’re focused today. Our business is really well capitalized. We have a pretty ambitious roadmap, and we’re just going to keep focusing on that for now.

Do you expect to raise another round of private capital if you don’t end up going public soon?

No, and we don’t need to. We won’t be seeking capital unless there’s a good reason to do it anytime soon.

Power Corporation, a major shareholder, recently wrote down the value of its Wealthsimple investment by 20 per cent. What do you make of that change?

It’s not surprising at all, given the markets that we’re in right now, across every industry. It’s not just tech anymore. For us, we’re focused on the long term. It’s a paper valuation that doesn’t impact our day to day in any way whatsoever. It doesn’t really impact the way we think about the business or long-term prospects. And it’s not unique at all in this environment.

Another shift for Wealthsimple has been leaving the U.K. and U.S. to focus on Canada. How has that affected your strategy here?

If you think about how our business has evolved in the last few years, it’s pretty remarkable. We started the company as an automated investment platform. We grew it to the U.S. and U.K.; we launched this advisors’ business. And in the last few years, what you’ve seen is us narrow our focus on the retail opportunity in Canada, and expand that beyond just automated investing.

What exiting the advisors’ business and the U.S. and the U.K. has enabled us to do is put way more attention and focus on that strategy, and it’s worked exceptionally well. Today, the vast majority of Canadians know Wealthsimple. We have millions of Canadian clients. And so I think that that’s been our strategy; it’s, “How do we focus and capture, just the magnitude of the opportunity in Canada, to reinvent people’s relationship with their money here?”

You’ve taken a lot of money from big global investors. Do they want to see you reenter those markets at some point?

I think our aspirations are bigger than the Canadian market, but we’re really focused here for now. The opportunity is so big in Canada that if we fail to capture it, because we’ve been too distracted by other things, then that’s a mistake.

We’re about to launch our unified app experience, which is a huge milestone for us. As we launched all these new products, we did it with different apps, and we ended up with four. No one wants four apps from Wealthsimple. And so we’re launching this flagship experience, which is designed to become the home for your financial life at Wealthsimple.

If you think about fintech around the world, it’s pretty unique. You have companies that typically do one thing in a market. Maybe they do a card, maybe they do investments, maybe they do crypto, maybe they do taxes. But to bring someone’s entire financial life into one place and be able to cut the cord with their existing bank relationships—that’s unique. And I think that’s why we’re so focused on winning that market opportunity here, because it’s just so giant. An opportunity to impact our clients’ lives, given the depth of that relationship, is just so outsized that we need to put all our attention and energy into that.

You’ve been investing pretty heavily in Wealthsimple’s crypto offering recently. What’s on the roadmap for that? Do you want to build an offering that’s more interoperable with public networks?

Within the last couple of months, we have enabled withdrawals and deposits of crypto assets, enabling that interoperability, which is something we’re excited about. 

We’re long-term believers in the ecosystem, and when we think about the biggest challenges in the ecosystem, one is trust. How do you know you can be with a partner you can trust, who’s making sure that it’s within the regulatory framework and creating a responsible platform for crypto investors? Another is usability. If you want to do self-hosted wallets, it’s not a particularly easy thing for most people, which is why not that many people in the world have them, even though there’s lots of people that own some crypto today. And so our view is, those are two things we’re very good at. We see ourselves as this, really, a bridge for those that are looking to participate in this growing crypto economy, but don’t know how.

Unlike many other platforms out there that are trying to convince you to put your life savings down on it, we always try to provide a responsible platform. We want people to be thoughtful about it and be responsible about their exposure. 

You didn’t have Luna available, right?

We actually do have Luna, and it was halted last week just like it was at almost every exchange in the world.

We have a long list of crypto coins. And I think that we have always maintained that we have no particular judgment on which coins are valuable or not, and try to provide warnings. It’s like when GME [GameStop] was taking off. We were the only brokerage, maybe even in the world, that surfaced warnings that said, “These are highly volatile securities!” But, you know, it’s your choice. If you want to buy them, you can do that. But we want you to understand the risk that you’re taking.

You’ve also been investing in your payments app, Wealthsimple Cash. What’s been your biggest challenge in competing with Interac e-Transfer in that area?

It requires changing behaviours. Interac is ubiquitous. Everybody has it, and that’s OK. We actually recently added the ability to send to Interac via Wealthsimple Cash. Interac is ubiquitous, but it’s not the best peer-to-peer sending experience out there. We think we’ve built that. And now people can actually send to their friends that might not yet be on Wealthsimple Cash and still benefit from the amazing, simple experience that we’ve built.

In our view, we don’t have to displace Interac to build something great. We actually are trying to build something that’s interoperable with it, that lets people take advantage of what we do really well, which is build an incredible experience, but doesn’t necessarily mean that they have to completely abandon what they’re used to doing.