Mike Gokturk has an extra $13 million in his company coffers after a successful funding round closed this week for Vancouver-based Payfirma.
While it’s a hefty chunk of cash for the financial technology startup, it’s not quite enough for the growth he envisions.
“The mutual funds want to invest in tech and there’s so much money out there, their mandate only allows them to invest in public vehicles,” Gokturk told Business in Vancouver May 28.
“We’re thinking of an IPO (initial public offering) next year only because there’s a lot of money on the sidelines but it’s money available in the public markets.”
Payfirma’s PayHQ platform processes debit and credit card payments mostly for small- to mid-size businesses. There are some enterprise partners — those needing to process payments of more than $100 million annually — and Gokturk said he wants to expand Payfirma’s PayHQ platform to reach even more of those big clients.
He’ll need access to more money to continue retooling the PayHQ platform and further fund growth plans at Payfirma, which is expected to see its workforce double from 45 to 90 within the next six months.
“Lately we’ve seen what I call a renewed interest of companies from Canada to come to the U.S. markets on a cross-listing basis or also just listing here because of the liquidity we have here,” said Alex Ibrahim, the New York Stock Exchange’s head of Canadian listings.
On May 21, Ottawa-based Shopify (NYSE: SHOP) beat already high expectations and raised US$131 million in its initial public offering.
“That’s why you’ll be hearing more and more companies in Canada pursue capital-raising activity either in the local market or in conjunction with the U.S. and I think Shopify’s transaction last week solidifies that we are ready,” Ibrahim said.
“The markets are waiting for technology companies from Canada and the investors are looking to diversify their portfolio and have the opportunity to tap into this (Canadian group) of companies.”
But early stage companies that lack the cache of Shopify or Payfirma fall into more of a grey zone when it comes to scraping together capital to fund growth.
Peter-Paul Van Hoeken, CEO and founder of Vancouver-based FrontFundr, said early stage companies he’s dealt with are often looking for expansion capital ranging from $200,000 to $5 million.
“It’s too big to (raise that much) with a few angel investors and it’s too small for a private equity or VC (venture capital) firm,” he said.
FrontFundr launched an online platform May 27 that allows early stage companies to pitch themselves to potential investors who aren’t living in or travelling much to Vancouver. If it’s a good match, FrontFundr connects the entrepreneurs with the investors.
Three companies — all of which were vetted by FrontFundr based on B.C. Securities Commission regulations to make sure they were in a position to manage funding — were making live offerings on launch day.
If any of them secure capital, FrontFundr is awarded a success fee.
“We want to make sure that there is the opportunity in the crowdfunding space to engage a larger group of investors in Canada,” Van Hoeken said.
