One of Toronto’s most successful software entrepreneurs, Kirk Simpson, is stepping down as CEO of Wave Financial Inc., the company he co-founded 12 years ago and sold to H&R Block, Inc. for 405 million US dollars in 2019.
Mr Simpson, 47, said the decision was “100 per cent mine” and comes shortly after Wave, now a standalone small business software unit of the US tax giant, recorded 100 million for the first time. Canadian dollars of annual income.
“It seemed like a perfect opportunity to transition and bring in someone who could lead it through its next phase of growth,” said Simpson, who will take a few months off and plans to start another. company. He declined to share details about his next startup.
Mr Simpson will be replaced by Zahir Khoja, who most recently served as managing director for North America for Australian online consumer finance giant Afterpay Ltd. “After an extensive search for Kirk’s replacement, we were thrilled when we met Zahir, who is entrepreneurial, a leader in the fintech industry and ready to guide Wave’s future success. said H&R Block CEO Jeff Jones in a statement.
“The pandemic has shown us that small businesses are critical to the health of the economy and our local communities,” Khoja said in a statement. “They are a group worth fighting for and more of them need the financial management tools provided by Wave.”
Wave was a significant company in the Canadian tech startup sector following the 2008-2009 recession. At the time, the domestic industry was reeling from the demise of Nortel Networks, while BlackBerry Ltd lost its lead in the global smartphone race. All that remained were largely capital-strapped companies at risk of being chosen by overseas buyers for bargain prices, branch offices, and a handful of tiny startups with names like Shopify, Hootsuite, Lightspeed — and Wave. Technology companies made up just 1% of the S&P/TSX Composite Index.
Wave started in 2009 as a free, cloud-based accounting and invoicing software for small businesses, gathering users quickly and inexpensively. Mr Simpson originally intended to make money selling advertising on the platform, but that proved to be a challenge. In the early 2010s, the company started offering financial services such as bank transfers, online loans, billing and payroll services through the platform to customers. It was early to offer so-called integrated financial services, which are now a key value driver for companies that sell digital operating system platforms to small businesses, including Shopify, Lightspeed Commerce, Clio and Jobber.
When pension plan giant Ontario Municipal Employees Retirement Systems became the first Canadian institutional investor to return to venture capital after the recession in 2011, it made its first investment in Wave. OMERS originally invested in a $5 million financing led by Charles River Ventures (now called CRV), which also made Wave one of the first Canadian companies at the time to leverage a large American venture capital firm.
“It’s very common these days for Canadian startups to attract US investment,” said Damien Steel, Global Managing Partner of OMERS Ventures and former director of Wave. “It was not common at the time. It was a great achievement at a time when the Canadian technology market was very small.
Wave raised US$77m in venture funding and had planned to do another funding in 2018, but ended up selling a year later to H&R Block – a significant “exit” that saw OMERS quintuple about its $10 million investment.
Wave’s “freemium” model – which typically sees a minority of free customers subscribing to paid services – has helped accelerate the company’s revenue growth, which has roughly doubled since the 2019 acquisition by H&R Block. , and the company increased employment to 370 people, from 260. Wave, with 300,000 paying and non-paying customers, mostly in the United States, is not yet profitable, but Mr Simpson said ” there is a definite path” to get there, declining to share details.
While many tech companies have seen their valuations plummet in recent months, Wave has been protected as New York Stock Exchange-listed shares of H&R Block have jumped 36% in value over the past year.
Mr. Steel thanked Mr. Simpson for not leaving immediately after the acquisition, but for staying to “complete his vision”. He added, “I can’t wait to see what Kirk does next. I would literally give him a blank check for his next adventure if he wanted to.
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