REGINA — Conexus Venture Capital’s CVC Fund No. 2 have announced another major venture capital investment, this time in a company looking to help the credit union sector.
In a news release, the Regina-based fund announced in January they had completed a $3 million oversubscribed fundraising round in Cyder, which they described in their release as a Canadian fintech startup that builds modern personalized loyalty programs for credit unions.
The investment was led by Conexus Venture Capital’s CVC Fund No. 2, with participation from MaRS IAF, Graphite Ventures and Sprout Fund.
Cyder is a Toronto based startup led by co-founders Sukhman Dulay, CEO, and Will Christodoulou, CTO/COO. The two had been friends for a decade and their interest in business and entrepreneurship led them to this idea to help one specific sector – credit unions – to create loyalty programs.
In speaking to SaskToday, Christodoulou explained their focus.
“We're a loyalty platform built specifically for credit unions,” Christodoulou said.
“Now, what that means is we've created technology that allows credit unions of all sizes to be able to launch their own Aeroplan or Air Miles program. What that allows the credit unions to do is provide their current members and customers an affordable way to say thank you or incentivize them to be having a stronger relationship with that credit union.”
Christodoulou said they have been “fortunate to work with some fantastic credit unions,” from some of the largest with 400,000 members out of Toronto right down to “what I consider the quintessential credit union of about 5,000 members right on Main Street, to allow them to be able to compete with the big banks and provide loyalty to their members.”
Because of their focus on developing loyalty programs for credit unions, it made sense for Conexus Venture Capital to get involved and lend their expertise in the field. Jordan McFarlen, Managing Director of CVC, spoke of why they got involved in funding the startup.
“They're a fintech redefining loyalty for credit unions, offering an excellent white-label solution and growing rapidly. One of Canada's fastest growing fintech companies," McFarlen said. “We're really excited to be investing in Cider out of our newly launched CDC fund, too. We think there's excellent strategic alignment here, given our credit union backing and all the synergies we think can come from this.”
McFarlen said when they look at a deal, they always try to find things that have a “good signal,” “good syndicate” and a “good story.”
“We think Cyder has an excellent story. They're tackling a really exciting challenge and opportunity for the credit union system both in Canada, North America and beyond. We've got an excellent syndicate with great co-investors from across the country who provide excellent capital resources mentorship. And then further, we've got an excellent signal here as the company's growing rapidly, gaining traction and performing very well.”
According to Conexus’ news release, with this investment Cyder “will expand marketplace partnerships, accelerate onboarding of additional credit unions and continue scaling its platform across the United States and Canada.”
Christodoulou said when they sought out CVC for funding, it was done “quite strategically in the sense that since our main market is focusing on credit unions, ensuring that the alignment with whoever was giving us the funding was someone who understood the space and also was able to vet, like, is this something that the industry is actually actively looking for?
“And so when we got that kind of nod from CVC, of course, it meant extra funding, but it also was a kind of indirect, but direct nod that this is a solution that the credit unions are actively looking for. So that was kind of a strategic alignment. We obviously were speaking with quite a few groups, but CVC was one that stood out just so plainly. And then the other groups like Graphite and MaRS and Sprout, they saw the opportunity in the market and the scale and the speed that the company's kind of getting adopted by.”
The process of finding funding was like a real-life Dragon’s Den in some respects — something the two founders knew all too well.
“We were on Dragon's Den,” Christodoulou said, adding, “You can see me look scared for eight minutes on TV.”
It may have been terrifying to face the Dragons on TV back in 2023, but their pitch at that time for an online data privacy solution successfully convinced Arlene Dickinson to invest in their company.
But Christodoulou noted Dragon's Den was an hour-long show. For their credit-union loyalty program idea, “this was like three, four months of getting questioned,” he said.
“The Dragon's Den folks are like, they definitely put you through the wringer and it definitely is valuable because they have great questions. The venture side, it's like, it's just longer. It's just such a longer process.“
For the founders Dulay and Christodoulou it has been a lot of work and a lot of long hours, but one motivated by a mission to convince more people to use the credit union sector.
“The way that we see it is that if more credit unions can adopt an affordable loyalty program and more Canadians bank at a credit union, the local economy and people benefit more than if a big bank gets the business and things like that,” Christodoulou said. “So Cyber's mission is to just get more Canadians and more Americans to bank with the credit union.”
