Inside the remaking of a Toronto fintech company

Koho, now controlled by Portag3 Ventures, takes inspiration from Wealthsimple's "playbook" in charting a new path to growth.

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Koho’s 13-minute-long “Dream Thieves” short film, released during a special screening at the grungy Fringe Festival for the Arts in Toronto last July, was unlike anything the banking world had ever seen. At least, that was the idea behind the spot, which equated banking fees with the harvesting of consumers’ dreams  as powerful an anti-banking message as any for a young fintech player.

But as the Toronto-based company matures, recently touting the end of a new round of investment and having reached around 120,000 customers and $500 million in transactions annually, it appears to be charting a new course, one that is decidedly more mainstream. And this time, it’s taking cues from sister company Wealthsimple, the Portag3 Ventures-backed investment robo advisor.

“The brand’s evolving to [become] very focused on being a champion for Canadian consumers and believing that they should get access, transparency at the lowest possible cost, and have an amazing product that truly delights them,” says Portag3 chief executive Adam Felesky. “That is more the ethos of the brand that we’re trying to create than being anti-establishment.”

Jason Chaney, who joined Koho as chief creative officer from Cossette in 2017, helped establish the brand’s current “Restore Balance” positioning, a nod to its promise to help consumers take control of their finances without making too many sacrifices. He also led the company’s rebrand last year, working with 123w on a design system that tapped into the opposing sides of one’s finances – the act of spending and of saving.

At the time, Chaney told strategy that “if you tell incredible stories, people will be attracted to that and the media will sort itself out,” which is why he allocated 80% of the marketing budget to produce the provocative ‘Dream Thieves’ spot that pitted the brand against traditional banks. Chaney has since left the company to pursue his consulting business, Ad.Vice, and Koho has no immediately plans to fill the CCO role.

Meanwhile, Julia Cooper, manager of growth and marketing, says Koho is now focusing on the positive side of savings, and doesn’t plan to continue along the dystopian ‘Dream Thieves’’ path (though a “Wake Up” poster from that campaign continues to hang ominously at the entrance of the fintech co’s office in Toronto’s Liberty Village). “Since it’s still early days in terms of brand awareness, we’re just going to continue to lean into our brand identity, which is to help restore balance.”

“What we really want to focus on is the value that Koho can bring users,” Cooper says. “That means focusing on what people are saving for, the positive stories that have come from our users.”

There may be another reason for Koho’s change of tack. The company is now more than 50% owned by fintech venture fund Portag3, thanks to an injection of $36 million in May that brought its total investment in the company up to $44 million, according to Felesky. And the fund, which owns roughly 89% of Wealthsimple, plans on enacting a similar “playbook” to help propel Koho through the next phase of its growth.

Felesky believes there’s little room for “myriad solutions” targeting similar needs in small markets like Canada. Early investment gives young fintech startups a chance to build a product that resonates with their specific segment, which can “beget growth and scale to a point that it becomes more difficult for a second or third player to come into the market and compete.”

“Our playbook [at Portag3] is we want to overbuild and invest in our companies that we believe can be category winners, and establish that leadership position as quickly as possible,” Felesky says, “because ultimately that leadership position creates incredible value over decades that is very difficult to dislodge in the future.”

Since the rebrand last year, the marketing team has developed a “holistic view of brand and growth,” Cooper says. “We’re too young a company to not be really focused on growth and acquisition. And we also can’t grow at the cost of our brand. We can’t do those two things separately if we want to do either of them well.”

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“We’re still navigating to decide where is the point that we really push on brand,” adds Felesky. “One of the important points of brand spend from our perspective is that it can be a very inefficient investment if you don’t have true product-market fit. And we think Koho is just now reaching [that] point.”

The last year has seen Koho tinker with its core product, adding a number of new features, including some more typically expected in the banking space, such as joint and premium cashback accounts. In April, it launched What the Fee, a new feature and website allowing anyone to connect their bank account and discover how much they pay in additional and “hidden” fees. (The company estimates the average Canadian pays around $159 in bank fees per year.)

And in a first for the company, Koho will begin testing kiosks in September at the Eaton Centre, Sherway Gardens and Fairview Malls in Toronto. It will also bring the concept to 29Rooms, an immersive pop-up event created by women’s lifestyle website Refinery29 that is visiting Toronto for the first time this fall. The lifestyle play is part of a larger sponsorship of Refinery29’s “Money Diaries” series, which explores how individuals budget and spend over a seven-day period.

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Koho also recently initiated a search for a VP of growth (according to a job posting that has since been taken down from U.S. startup website AngelList). The outline of the role included the growth, brand and marketing functions, with the post stating that the company is looking for someone who can develop a “holistic, data-oriented marketing strategy that includes demand generation, brand, product marketing, customer marketing, content marketing, partners, and any other programs deemed necessary.”

The company has put that search on pause, according to Cooper, who believes that “ultimately we are a product-driven company, and our referral and organic sources of acquisition are humming along at a great pace.”

Instead, as part of a portfolio building strategy, Portag3 has hired San Francisco-based SzeJack Tan, head of growth marketing for Google Assistant, as a growth advisor. According to Cooper, Tan has been working with Koho on its “growth challenges” since May. He currently splits his time between two or three different companies within the Portag3 portfolio, offering his expertise as an external resource.

In the meantime, Cooper says the marketing budget has remained more or less consistent over the last few years, and that the latest round of investment has not led to “blowing the lid off hiring.” In addition to having an internal growth lead, financial coach (that doubles as content creator), a partnerships lead and a designer, the marketing team works very closely with VP of product Aaron Cheng, who previously served as managing director at Flipp.

Looking ahead, Felesky believes Koho can grow at 5% per month “for a very long time.” Five years from now, he believes the company could have as many as 1 million accounts, with growth coming organically, through partnerships with other brands, and through leveraging Portag3′s fintech ecosystem, which currently serves around 1.5 million Canadians.

Correction: This article has been updated to reflect that hiring at Koho remained more-or-less consistent following the most recent investment round.