Leading fintech lender Thinking Capital has been acquired by Purpose Financial LP, the parent company to Purpose Investments, Purpose Advisor Solutions, and Purpose Innovation Labs. According to sources The Globe and Mail spoke to, the company was bought for over $200 million.
Montreal-based Thinking Capital is a leader in the fintech industry. The company provides alternative sources of financing to small and mid-size businesses based on how well a business is run and its resulting cash flow.
Thinking Capital partnered with TouchBistro last year to simplify restaurant financing. Using proprietary data and algorithms to make lending decisions based on a more holistic picture of how businesses are managed rather than on personal financial and credit information, Thinking Capital has provided financing to thousands of restaurants across Canada over the past ten years, and can evaluate a business and its operations in as little as 24 hours to get restaurants the capital they need.
The acquisition was a combination of cash and securities and will create a business with significant balance sheet strength, strong financial backing and a diversified funding model. The new model will fuel Thinking Capital’s originations growth through improved access to capital at a reduced cost. In addition, the combination of direct originations with asset management offers the potential to create unique investment products.
— Purpose Investments (@PurposeInvest) March 9, 2018
“Purpose Financial has an unrelenting focus on building innovative, technology-driven financial solutions,” said Som Seif, Chief Executive Officer of Purpose Financial. “Thinking Capital is a clear leader in the small- to medium-sized (SME) business lending space, with credit adjudication technology and presence that are unmatched in the Canadian market. This acquisition brings together leading origination, asset management, and technology platforms as a unified entity, and enables us to bolster our product capabilities and optimize the technology, distribution, and funding model of our combined business.”
Since Thinking Capital’s inception in 2006, it has increased the size of the addressable market for SME credit by delivering more than $750 million in incremental funding.
“While 98 percent of businesses in Canada are small businesses, many have limited access to capital to fund their growth. As an early innovator in this market, we have spent the last decade evolving the language of small businesses credit,” said Jeff Mitelman, CEO and co-founder of Thinking Capital. “Under the Purpose Financial umbrella our time to market on product innovation and funding capacity will be greatly amplified. We look forward to the new possibilities our union will bring to the small business community.”
Thinking Capital will retain its Montreal headquarters as well as all of its Montreal employees. Mr. Mitelman will become a Managing Partner of Purpose Financial and will retain a meaningful equity position in Purpose Financial alongside existing investor TorQuest and Thinking Capital’s management.