Portage is seeking to raise up to $1bn to fund late-stage fintechs

Portage is raising a structured equity fund that will focus on financing late-stage startups in the financial technology sector that are reluctant to take a hit in their valuation amid the market downturn, the company said in a press release.

The fintech fund is seeking to raise up to $1bn for the so-called structured equity fund, investing in securities that combine debt and equity features and do not require startups to lock in a valuation as with traditional equity fundraising, Adam Felesky, co-founder and chief executive officer of Portage, told Reuters in an interview.

“We’re a liquidity provider in environments that otherwise would be quite difficult,” Felesky said.

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Reuters previously reported the move.

Startups have been reluctant to launch traditional fundraisings in the financial downturn because they would be forced to accept a lower valuation than their previous funding round.

Valuations of fintech companies have tumbled this year in a broad stock market sell-off. Swedish payments firm Klarna Bank AB dropped 85% in valuation while BNPL rival Affirm Holdings has shed more than 80% of its value.

Portage is aiming to raise $750m to $1bn for the fintech-focused fund, with a $200m capital commitment, according to a source familiar with the matter. The firm is expecting to reach a first close for the fund in November this year, the source added.

The Toronto-headquartered fintech fund started discussing its planned Portage Capital Solutions Fund (PCS) with investors about a year ago, the source said.

PCS will provide capital in the fintech space in the United States, Canada, and Europe, aiming to invest in companies with a valuation over $500m and with $100m to $200m in revenue.

The fund also aims to provide a capital solution for cash-strapped publicly listed companies whose shares have plunged, according to the sources. It can offer a so-called private investment in public equity (PIPE) that is less dilutive to companies.

Veteran investors Daniel Ballen and Devon Kirk will co-lead the strategy for Portage, the company said.

Portage is a subsidiary of multi-strategy alternative asset manager Sagard. Portage announced last week that it has closed on $655m for its third flagship fund, the largest to date. It plans to invest in seed through Series C stage fintech in the United States, Europe and Canada.

Source: Reuters

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