Caisse, Sun Life backing new $75-million fintech fund

TORONTO A new $75-million venture capital fund is being launched to develop early stage fintech companies and artificial intelligence applications for financial services with the backing of large financial institutions including the Caisse de dépôt et placement du Québec and Sun Life Financial.

Additional partners in Luge Capital include Desjardins Group, the Fonds de Solidarité FTQ, and La Capitale, and the fund could be increased to as much as $100 million in the coming months.

Luge Capital, named for the winter sport that involves hurtling down an icy course at high speed, will focus on seed and Series A financing. Initial investments will be between $250,000 and $2 million.

“The fund will support the development of innovative solutions that improve customer experiences, enhance efficiency for financial institutions, and implement datadriven methods and artificial intelligence for decision-making,” the partners said in a statement.

Luge is expected to tap its financial backers for more than just money in the development of their products and services.

“Our AI and data-driven companies will have the opportunity to partner with our investors to access key insights in order to build best-of-breed solutions,” said David Nault, co-founder and general partner in Luge’s Montreal office.

Nault, who has more than 20 years of entrepreneurial and investing experience, will lead the Montreal office. Karim Gillani, who has extensive experience in fintech, will run an office based in Toronto.

“We are looking for young mission-driven companies that challenge how the world interacts with financial services,” Gillani said.

The initial $50 million of capital was raised and announced by the Caisse and Desjardins last October.

“There is a booming startup ecosystem in this sector,” said Guy Cormier, chief executive of Desjardins.

The backers of Luge are not the first traditional financial services firms to back a venture fund dedicated to developing financial technology-backed products and services.

Another example is when the Desmarais family behind Montreal-based Power Corp. launched Diagram last year with 50 individual “angel” investors to fund entrepreneur-driven fintech startups. The fund raised an initial $25-million, with a huge tranche from the family’s investment vehicle Portag3.