One of the most influential families in insurance is now turning its attention to fintech start-ups.
Thirty-four-year-old Paul Desmarais III, of the powerful Desmarais family, will serve as chairman of Diagram in addition to his responsibilities as vice-president at Power Financial Corp. and holding company Power Corp.
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Diagram is a venture capital fund that will finance fintech start-ups, particularly those operating in the financial services, insurance and healthcare sectors. In a departure from other venture capital funds, which offer early-stage funding to dozens of start-ups, Diagram plans to provide large capital to about five or six companies over a few years.
Start-ups backed by Diagram will not only receive funding but also have access to expertise (possibly even distribution and clients) through Power Financial, its affiliates, and connections with angel investors. Diagram will also offer active support to the start-ups as they grow, handling functions such as recruiting and accounting.
To date, the fund has raised $25 million; most of which came from Portag3 Ventures LP, itself sponsored by the Desmarais’ Power Financial and subsidiaries IGM Financial Inc. and Great-West Lifeco Inc. Diagram is also backed by 50 individual angel investors.
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Desmarais told
Financial Post that the separate fund was designed to be “a very hands off, entrepreneur-friendly model” of fintech development outside of Power Financial.
“The goal is to create Canadian fintechs that become global financial service leaders from a strong Canadian base,” he said. “Whether they’re complementary, disruptive, a little bit of both, I think we will see how the business models emerge.”
This is not the first time the Desmarais family has expressed an interest in disruptive, tech-driven ventures. Several companies affiliated with Power Corp. have made investments in the past in fintech start-ups through Portag3.
Francois Lafortune, who originally pitched the idea for Diagram, will serve as the fund’s CEO.
Financial Post noted that Lafortune and Paul Desmarais’ younger brother Nicolas were acquainted with each other for years. Lafortune has an entrepreneurial background and has served as a consultant at McKinsey & Co. for eight years.
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