August 8, 2023: Small business banking with Vault
Learn more about today's industry leaders, a company thats hiring multiple roles, another massive round to discuss, and everything you need to know for the week ahead
Profile: Vault, Small Business Bank
What is Vault?
Vault is the first all-in-one business account that saves Canadian businesses time and money. Vault offers multi-currency accounts, corporate cards, global transfers, currency conversion, and accounting – all in one place. Get up and running in less than 5 minutes without ever having to step foot in a branch.
What was the insight/inspiration that led you to launch it?
The consumer banking side was making progress, but the state of business banking was disappointing. Surprisingly, despite COVID driving improvements in online services for many industries, banking did not follow suit. Currently, it's still necessary to visit a branch to open a business bank account with the major banks.
How has it been received by the market? Why do you think it has been so well received?
During our closed beta, Vault has received highly positive feedback with companies referring others to join. The platform empowers companies by offering full control over their finances, including international payments, currency conversion, and instant employee card generation, all without the need for physical branch visits or excessive fees.
How did your work at Revolut lead to this product launch?
Launching Revolut in Canada was like a guided startup experience. While it didn't succeed, it provided deep insights into the local landscape, payment infrastructure, regulations, partnerships, and customer needs. It also reinforced the concept of challenging conventions.
How did you know you were ready to found a company?
I don’t know that either Ahmed or I were ready. We saw a gap that remained unsolved in the market, and we believed we were the best people to solve it and that’s about it.
“We had a rough blueprint of what we wanted to do and how we thought we’d get there, but 99% of it is figuring it out as you go.”
How did you meet your founders/know they were the right people to start a company with?
Ahmed and I connected at Revolut, being the initial hires for Canadian expansion.
Our intensive and fruitful 3-year collaboration before Vault's inception forged a lasting partnership through challenging experiences. If we emerged intact and eager to continue, it solidified our compatibility.
Left to Right: Co-Founders Ahmed and Saud
What has been the hardest thing on your journey so far?
Inadequate fintech infrastructure and accessibility in Canada prompted us to design the desired product after customer discussions. Yet, due to lacking infrastructure, significant time and resources were funneled into its creation. Similarly, access to payment rails was restricted for non-financial entities, necessitating partnerships for entry.
What has been the most pleasant surprise?
How incredibly supportive and helpful friends and former colleagues have been. Whether helping with hiring, introductions, or beta testing, they’ve gone above and beyond anything I expected.
What is your super strength?
Persistence (or stubbornness).
Every day you’ll likely have 10 things go wrong and if you’re lucky you’ll have 1 go right. That ratio holds true for a very long time and without persistence (and great folks by your side) it would be very hard to keep going.
What are you trying to achieve over the next 12 months?
We’re still in closed beta but will be doing our full launch this year. We’ve gotten great feedback from our beta customers and want to provide the same experience to the Canadian businesses that have been underserved for too long. We’re also looking to digitize more banking products for businesses and increase access to products they’ve never had.
What advice do you wish you had been given prior to launching?
Make sure to run your onboarding process through the mom test.
I got my parents onboard to Vault shortly after our launch and watching them go through onboarding was very painful as there were minor tweaks we could have made to make it smoother.
What is your proudest accomplishment outside of your startup?
For a long time, I’ve been at odds with balancing various parts of my life like most folks (work, family, friends, etc.)
It took a long time to get here but I have clarity into what’s important and how to juggle these various responsibilities.
Who are the 5 Canadian startups you like in your market?
Sonnet - fast and simple onboarding + competitive pricing
Walnut - Derek, and the team at Walnut are great. Onboarding was almost a white-glove experience, and they managed to get us very competitive rates
Nesto - fast and easy application process + competitive pricing
Zum Rails - Robust API with great documentation. They really get Canadian payments
Wealthsimple - Lately, I like the simplicity of the product (for something that is so robust) and the transparency in their messaging
Quick Take: Sun Life Acquisition
Sun Life takes advantage of current market conditions to acquire Dialogue
What is the news?
In late July it was announced that Sun Life Financial inc would acquire the majority of Dialogue Health Technologies Inc. that was not owned by Sun Life Assurance Company of Canada and certain common shares owned by members of the Dialogue management team.
Sun Life is paying $5.15 in cash per share which values the entire company at $365m while costing Sun Life only $277m.
Why will it only cost Sun Life $277m?
Sun Life's actual expenditure is less due to two factors:
Sun Life already had prior investments in Dialogue, owning a portion of the company.
As Dialogue will continue to operate independently after the acquisition, and certain management members will retain their shares, Sun Life doesn't need to pay for these retained shares.
How did this deal come together?
Dialogue hired outside bankers to do a strategic review of the company options and Sun Life made the highest proposal to acquire Dialogue which the company accepted.
Why did the company do a strategic review?
Dialogue's stock plummeted over 80% since its IPO, despite the business performing well. The board likely felt the need to protect shareholders and initiated a strategic review with outside consultants. The acquisition by Sun Life emerged as a promising option to offer returns to investors. Despite the acquisition price being lower than the IPO price, it still marks a 40% rise from the recent trading price.
Furthermore, the revenue multiple from the past year is higher than what Telus paid for LifeWorks in 2022, showing a favorable comparison.
Why did Sun Life decide to make this acquisition?
Sun Life had prior investments and a strategic partnership with Dialogue:
Sun Life invested $32.7m in Dialogue in 2020.
Dialogue's services were offered in Canada under the name Lumino Health Virtual Care in March 2020.
Dialogue's platform was licensed by Sun Life US to offer services in the US in July 2023.
The virtual healthcare sector, widely adopted since Covid, is now consolidating. If Sun Life hadn't made the best offer, Dialogue could have been acquired by a competitor, possibly disrupting their partnership.
The acquisition could benefit Sun Life by accelerating its innovation and revenue growth.
However, a potential drawback is that Dialogue may lose business if other insurance companies prefer not to partner with a Sun Life-affiliated company.
What is the takeaway for our community?
The Dialogue journey provides key lessons despite its challenges. The company created significant value for investors and its services are widely used. Here are some takeaways:
Thriving in fast-growing but fragmented markets like virtual healthcare is challenging without unique positioning or distribution.
Overvaluation can be harmful, especially in public markets where rapid valuation adjustments can occur. This possibly led to Dialogue's acquisition.
Favorable outcomes often occur when a company is bought rather than sold. Sun Life's decision to buy Dialogue is a prime example.
More from Dialogue:
Cherif Habib, CEO of Dialogue Technologies joined a past TechTO event and shared more on understanding IPO
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