Toronto fintech Wealthsimple has raised $425 million at a $13.8-billion valuation, a 38 per cent increase from the $10 billion it was last valued at in another blockbuster funding round a year ago.

The round: Singaporean sovereign wealth fund GIC led the round, with participation from Power Corp., IGM Financial, Iconiq, Canada Pension Plan Investment Board and Inovia. In an interview, CEO Michael Katchen said the round does not include any new investors, despite a lot of interest. “We had so much demand from the existing cap table that it didn’t make sense to bring anybody new in at this time,” he said. The round is split into $300 million in new equity and a secondary sale in which employees and existing shareholders will sell up to $125 million worth of shares.

Why raise: Wealthsimple raised the money even though it’s profitable and growing quickly, with $169.2 billion in assets under administration, up 69 per cent from its last fundraise in Oct. 2025. Katchen said Wealthsimple will use the funds to develop new products and satisfy regulatory requirements for capital on its balance sheet. He said Wealthsimple will share more details about its product plans at a launch event next week, adding it will announce new AI features “in pretty short order.” The fintech won’t use the funds on marketing, he said, because it’s already made a major pivot away from advertising and towards incentives like cash bonuses for new transfers and a monthly sweepstakes program.

Watch your back: Wealthsimple has a strong lead in Canadian challenger banking, but competition is heating up. Competitor Koho raised $130 million at a $1.33-billion valuation in June from investors including Abu Dhabi sovereign wealth fund Mubadala. EQ Bank is integrating PC Financial following its $800-million acquisition of the business from Loblaw, while Scotiabank-owned Tangerine is working to reinvent itself as a high-tech, AI powered digital lender. More competition may yet come: the Office of the Superintendent of Financial Institutions is now fast-tracking applications for banking licences from credit unions, fintechs and other “technologically innovative” businesses, in an effort to speed up the notoriously slow process.

Fee frustration: Katchen said if he could remove one obstacle standing in his way, it would be the fees big banks charge their customers to transfer money out of their investment accounts, which cost Canadians an average of $150. The federal government promised to ban such fees in the 2025 federal budget, but hasn’t put it in practice. He thinks he’s close to getting his wish. “We’re on the doorstep of getting that implemented,” he said.