Two Canadian FinTech startups have ceased operations as funding continues to decline for the sector.

Montréal neobank Pillar, backed by Diagram Ventures, and Victoria-based personal finance app Billi have both shut down in the last month, becoming the latest casualties in the slowdown in venture capital investments.

Canada’s FinTech sector sees more startups struggle as they operate in a downturn.

Pillar CEO Michael Mire wrote on the startup’s website that while Pillar experienced rapid growth, it did not operate profitably due to its size.

“Pillar is a venture backed company that prioritized growth over profits,” Mire said. “Unable to secure additional funding on reasonable terms, we were no longer able to support our current growth business model.”

Mire founded Pillar in 2021 with Elena Litani and Vincent Deschenes. The startup provided chequing accounts for Canadian business owners and worked with over 1,500 businesses.

Billi offered a financial management platform that integrated information from users’ various banking and credit accounts to provide insight into their spending. It was spun out of Pretio Interactive, which develops marketing technologies, after its sale to marketing agency Bold Collective in 2021.

Billi CEO Tyrone Sinclair’s statement about his company’s shutdown echoes Mire’s. Sinclair noted that Billi was “unable to secure the funding required to continue operating.” BetaKit has reached out to Pillar and Billi for comment.

Impacted by tough fundraising conditions, Canada’s FinTech sector is now seeing more startups show signs of struggle as they operate in a downturn.

CB Insights reported in 2022 that the second quarter of that year saw venture capital investments in Canadian FinTech companies plummet by 70 percent year-over-year, from $1 billion to $300 million.

RELATED: CB Insights report says the bottom fell out of Canadian FinTech funding in Q2 2022

Nuula is another example of a Canadian startup which has faced tough fundraising conditions in the last year. The company, which provided financial products to small business owners, failed to close its Series A round in October 2022, when it had planned to raise $5 million. With limited cash on hand, Nuula laid off its employees and was later sold to Nav Technologies.

On a larger scale, Canadian startups that saw rapid growth during the pandemic are downsizing to cut costs. Debt lender Clearco, which specializes in revenue-sharing agreements with e-commerce startups, reached a $1-billion unicorn valuation in 2021. It had 500 employees at its peak in markets across North America, Western Europe, and Australia. Clearco made two rounds of layoffs within the last year, terminating approximately 175 employees across both. Clearco also ended its international operations in 2022.

In addition to the difficult fundraising environment, consumer demands are changing as market conditions tighten. In an effort to adapt, a number of startups are shifting priorities in their product strategies.

One such example is Neo Financial. It launched its flagship consumer credit card during the earlier part of the pandemic, relying on retail partners that were floundering at the time. Recently, the Calgary-based startup took on a renewed focus on embedded finance, which has been described as the future of many fintech companies.

Featured image courtesy Billi.

The post Banking apps Pillar and Billi shut down as funding dries up for FinTech businesses first appeared on BetaKit.

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