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Joe Canavan, of Canavan Capital, outside his office in Toronto on Dec. 13.Christopher Katsarov/The Globe and Mail

For decades, Joe Canavan had a reputation on Bay Street for turning around languishing asset managers.

But over the last 10 years, he has pivoted from managing to investing, piling millions of dollars of his own money into early-stage technology companies. This has quietly helped launch a slew of startups, even as the tech sector faced a steep downturn.

An active venture capitalist and retired Bay Street veteran, Mr. Canavan’s portfolio consists of more than two dozen startups, largely focused on technology businesses. About 80 per cent of them are so-called fintechs: companies that aim to digitally enhance the way customers interact with their bank or financial services institution.

And while the technology sector has seen a major crash in valuations over the last two years, several of Mr. Canavan’s own big bets – which range between $100,000 and $2.5-million per company – have continued to raise funds and partner with some of the largest asset managers in the country.

“There are so many companies out there that are going to be game changers, companies that are going to disrupt the exact industry that I spent 30 years building,” Mr. Canavan said in an interview.

“Now, I want to spend my time around these incredible young people who are super bright, super passionate and super energetic. It is this exact group of young talent who are creating these fascinating companies that can change the course of our country.”

Mr. Canavan, 59, is better known on Bay Street for re-building household investment names in asset management – and then selling them. He began his career in the fund industry in the early 1990s with Fidelity Investment Canada. In 1994, he went on to become president and founder of GT Global Canada, a multi-billion dollar asset manager that was sold to Invesco Trimark in 1998.

After GT, he founded Synergy Asset Management Inc., and later became the chair and chief executive officer of Assante Wealth Management. In 2003, both Assante and Synergy were acquired by CI Financial, where Mr. Canavan continued to run the wealth management team until 2009.

One of his last corporate ventures was merging Aston Hill Financial with Front Street Capital – two fund companies that were both struggling to gain traction among investors. Mr. Canavan rebranded the two companies in 2016 to LOGiQ Asset Management, and then sold the retail and institutional businesses in two separate deals to Purpose Investments in the following couple of years.

Mr. Canavan’s pivot from managing portfolio managers to investing in the tech sector came in 2009, just prior to his retirement from CI Financial. Two young executives asked him to review a pitch for a new company called Next36. which helped entrepreneurs raise private equity funds. Within a year, Mr. Canavan became one of its largest donors and its first board member, and 10 years later, he became Next36′s CEO.

Since then, he has become a prominent mentor to many young CEOs, particularly those in the fintech space.

“If I’m being entirely transparent, 80 per cent of startups fail, so you really only have a 20 per cent chance of success,” Mr. Canavan said. “For me, I’m consistent in what I look for when I meet an entrepreneur and what they bring to the table.”

With a background in wealth and asset management, it is no surprise Mr. Canavan has been drawn to companies that aim to “disrupt” the exact industry he had thrived in. But when it comes to whether he will hand over cash or not, it is the individual leading the company that he focuses on the most.

“I really look at the integrity and values of an individual … and the fact that they’re taking on other people’s money and how serious that is for them,” Mr. Canavan said. “Only once have I partnered with someone who took that for granted and we had to look for a new leader for the company.”

He also takes a deep dive into the company’s leadership team and its advisory board.

One of Mr. Canavan’s first mentees was Michael Katchen – the CEO of a then-startup investment company called Wealthsimple. Mr. Katchen, 25 years old at the time, was seeking advice on how to build his robo-adviser investment business, a technology that was already being called a digital disrupter to the financial services industry.

“When I first met Mike, I liked his drive and, quite frankly, I looked at his business model and thought this is something that is going to take on everything that I built in the last 30 years of my career,” Mr. Canavan said.

“Then I looked at the other people he had around him. I liked his capital structure. I liked the people he was starting to accumulate as an advisory board, so it was very easy for me to say yes to help him.”

Mr. Canavan invested $250,000 in Wealthsimple in May, 2014. Today, the online financial services company manages about $25-billion in assets, and IGM Financial is a 24.3-per-cent shareholder of the company.

Wealthsimple remains in Mr. Canavan’s investment portfolio, along with several other early fintech businesses such as online loan provider Borrowell Inc. and online bank challenger Koho Financial Inc., which earlier this month completed an additional round of financing for $86-million.

But as some companies in his portfolio grow beyond the need for his advice – or get sold to larger incumbents such as Layer 6 Inc. (which sold to TD Financial group in 2018) and (sold to Shopify) – Mr. Canavan is constantly keeping tabs on what could be his next investment, even five or 10 years from now.

“I have spent the last 12 years identifying the next great entrepreneurs so when I get in early, help them financially, guide them strategically, and they ultimately build an extraordinary business that captures significant market share ... I can keep that cycle going,” he added.

For example, he says, the financial windfall from the sale of Layer 6 to TD was reinvested into three new ventures.

Today, he spends most of his time advising the chief executives of five new startup companies. (A sixth investment – an AI mortgage software company called Savvy – was recently sold to independent online brokerage Questrade.)

One such CEO is James Rockwood, the founder of CapIntel, a digital software company that helps investment advisers create financial plans as well as asset managers companies to develop easy to understand investment proposals. Mr. Canavan has invested $150,000 in CapIntel and spent the last two years mentoring Mr. Rockwood in growing the business.

CapIntel has signed strategic partnerships with 11 companies in the wealth and asset management industry, including IG Wealth Management (formerly Investors Group), BMO Insurance, MD Private Investment Council and Empire Life Insurance. In total, the deals have led to more than 12,000 advisers using CapIntel technology.

Other fintech sectors Mr. Canavan is placing bets on include the mortgage industry and payment processing.

Backed with a $150,000 investment, tiptap is an easy-to-use payment tap device that allows for an individual to give cashless donations or tips. Charities, such as the Salvation Army, have been drawn to the technology, as well as hotel chains for tipping porters, Mr. Canavan said, as the number of people carrying cash has been “declining for years.”

Homewise, a more recent investment for him, is a digital mortgage brokerage and real-estate business that allows a potential home buyer to process a mortgage application within five minutes – much faster than most traditional online applications.

Looking ahead to the next five to 10 years, Mr. Canavan believes the insurance industry will be next to see major disruption from fintech competitors known as “insurtech” companies. Just recently, he invested $450,000 in an online insurer, YouSet, a company that calculates home and auto insurance rates from dozens of insurance providers. He contributed an additional $50,000 in another financing round.

“Insurtech is really hot in the United States and in Europe, but not here in Canada,” Mr. Canavan said. “I’m not really from the insurance business, but I absolutely do believe that this is an area that is going to be massively disruptive in the years to come. It’s an area I’m keeping my eye on.”

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