Portag3 Ventures, a fintech fund launched in October by Canadian holding company Power Corp, is led by an executive who knows a thing or two about disrupting the financial world.
Adam Felesky, Portag3’s president and managing partner, spent much of his career in the exchange-traded-funds business, which gained popularity in public markets by offering a cheaper and more liquid investment alternative to mutual funds.
Felesky likens this experience to today’s fintech startups, whose innovations reflect a new source of challenge and opportunity to traditional financial services providers.
“ETFs are technology,” Felesky told PE Hub Canada. “They changed the investment landscape with their rapid growth and are now echoing in every vertical of the global financial industry.”
Felesky left his firm, Horizons ETFs Management (Canada), last year to begin a new career as a fintech investor. He partnered with others, including Power Corp, in financing such companies as Koho, a mobile app for managing spending and saving.
It was about this time that he met Paul Desmarais III, whose family built Power Corp’s corporate empire. Felesky says he discovered a kindred spirit in Desmarais, someone who was “equally passionate” about the potential of Canada’s fintech sector.
Felesky joined Power Corp in 2016 to run its VC program. Together with Desmarais, he created Montréal’s Portag3 to house the fintech investments of Power Corp’s affiliates, Power Financial, IGM Financial and Great-West Lifeco. The fund also received “substantial capital” to deploy to fresh deals, he said.
Portag3’s investment strategy will be global in scope but with special attention paid to the “generational opportunity for financial technology in Canada,” Felesky said.
It will invest directly in fintech startups, often taking majority stakes of no fixed duration. These investments will typically be strategic in nature, guided by Power Corp’s interest in enabling technologies and new customer opportunities.
The fund will also syndicate in financings with other VC firms: “We’d be thrilled to be a minority investor in the next Canadian fintech unicorn,” Felesky said.
Portag3’s existing portfolio includes Wealthsimple, an online investment manager founded two years ago by Canadian entrepreneur Michael Katchen. The company, which Felesky says is approaching $1 billion in value, secured an initial pledge of $30 million from Power Corp last year and is now controlled by it.
Other investments include Borrowell, a marketplace for consumer loans, and League, a health-insurance platform.
This week Portag3 added to the portfolio, joining the seed round of Zensurance, a digital commercial-insurance broker. The financing was led by Ferst Capital Partners.
Along with direct deals, Portag3 will be a limited partner in fintech funds that provide “access to idea flow and exposure to markets,” Felesky said.
Portag3 is an LP in the second fund of Information Venture Partners, founded in 2014 by Robert Antoniades and David Unsworth, former principals of RBC Venture Partners. Information Venture Partners II raised $106 million last month. The portfolio also holds a commitment to U.S. VC firm Nyca Partners.
Felesky hopes Portag3’s market presence, and that of other specialty funds, will spur more Canadian entrepreneurs to launch fintech startups. “That’s a big part of our mission statement,” he said.
Portag3 is among a growing number of corporate VC funds active in the global fintech space, KPMG and CB Insights recently reported. They said corporate deal participation rose this year, despite an overall decline in fintech deployments relative to 2015.
Photo of Adam Felesky courtesy of Portag3 Ventures