Top Decile Podcast: Tal Schwartz

Most investors treat a market that runs behind the United States as a discount bin. Tal Schwartz treats it as a map. He spent roughly a decade chronicling Canadian fintech from the inside, and what he kept seeing wasn't that Canada was smaller or slower. It was that Canada was legible. "Because policy might be, you know, let's say five years delayed behind the states, you often have the same types of businesses being built in Canada just five years after you would see a very similar business in the US," he told Connor Sattely on the Top Decile Podcast. That lag isn't a handicap in his reading. It's an edge, and it's the foundation of North Exit Ventures, the seed fund he co-founded to back B2B fintech founders across lending, payments, insurance, and wealth.

Watch The Full Episode Here: https://www.youtube.com/watch?v=VZLz7BIvjw0

The Case for a Market That's Five Years Behind

Schwartz doesn't romanticize the delay. He uses it. "I can look to the American market and see certain trends developing and which ones implode and which ones take off," he said. "And that gives me a very, very strong sense of what will be successful in Canada."

The lag comes down to policy. Financial services is heavily regulated, and Schwartz argues the regulatory path separates one fintech ecosystem from another far more than founder quality does. Open banking, the permissioned sharing of financial data between banks and third parties, is his example. The US took what he calls "a much more market-led approach." In Canada, the concept "has been held onto with a vice grip by the incumbent financial institutions." That's changing. A new government has moved to open up competition, open banking is arriving, and payments modernization is following it.

The market structure explains the prize. "We have forty million people in this country and over ninety percent of them have a primary financial relationship with just six companies," Schwartz said. Those institutions are stable, and he credits them for it. But they're also among the most profitable banks in the world, and "the reason for that is not because they provide such strong services or because consumers love them." They've relied on fee extraction from consumer and business clients. That's the surface his portfolio is built to disrupt.

A Fund Built the Same Way as a Career

Schwartz didn't arrive at venture through a fund. He arrived through community. "I started the fund really the same way that I started my career, which was a big focus on community building," he said.

His first job out of university was starting the Canadian Lenders Association, then a small trade group of non-bank lenders. Ten years on, it's the largest financial services trade group in the country, with every bank and hundreds of fintech companies as members. He also runs the Canadian Finance Summit and has written the Canadian Fintech Newsletter for about five years. The effect was a front row seat to the people who went on to lead the country's biggest technology and financial companies.

When it came time to raise, he recruited exited Canadian fintech entrepreneurs as investors: founders behind the country's largest home improvement financing company, its largest point-of-sale auto lender, and other businesses that reached meaningful exits. "All of these individuals have the same DNA," he said. "They know the fintech industry cold." The fund was designed around what they bring, which is expertise, operating experience through scale and exit, and network.

Two Buckets, One Bet

Schwartz sorts Canadian fintech into two buckets. The first serves the Canadian market. The second is founded or headquartered in Canada but not constrained by it, selling into the US, the UK, and Australia. One pre-seed investment, a Vancouver company financing ad spend for agencies, found most of its growth abroad and relocated to San Francisco. The portfolio is weighted fairly evenly between the two.

The domestic half is where the thesis gets contrarian. American investors often assume the best Canadian founders are the ones sprinting for the border. Schwartz's view is that a company can win by staying, as long as it wins completely. "In order to drive venture scale returns, that has to be the bet," he said. Canada can't support four or five category leaders the way the US can, so the play is to take a niche the large carriers, banks, and trusts aren't focused on, own it, and grow the category outward. In practice that means non-prime credit, embedded finance for merchants, and similar edges rather than head-on competition with the incumbents.

His stated advantage is timing. "We're meeting these companies so, so early in the journey," he said, early enough to advise on whether the right move is to stay in Canada or accelerate into other markets.

How He Screens for Fintech That Does Good

Fintech carries a reputation for extraction, and Schwartz has a simple test. The easiest way to tell whether a company creates social value and not just economic value, he said, "is to compare it to what it's competing against." Most fintechs are online-first, so they don't carry branches or large compliance departments, and those savings can be passed to the customer. The through line across his portfolio is friction removed: cheaper, simpler, more transparent than the system it replaces.

The Advice He'd Send Back in Time

Schwartz came into venture without professional investing experience, having done some angel investing, advising, and board work. He's candid about where he sits. "I'm very early in this journey right now, so I don't claim to be an expert in the industry."

His advice is narrow on purpose. Focus on what you're genuinely good at. He and his team ruled out categories where they'd have no advantage and concentrated on the one where they had what he calls "an incredibly unfair advantage," early stage Canadian fintech. Second, "surround yourself with people who have done it before," which is exactly what his investor base is. Third, get good advice early. He credits VC Lab and Decile with compressing his path into the asset class, noting that "it would have taken a lot longer, I think, for me to have gotten to this point."

Two years into fund one, with nearly the entire fund deployed, significant markups, and multiple exits, the community he spent a decade building is doing what he designed it to do.

About North Exit Ventures

North Exit Ventures is a seed fund backing B2B fintech founders across lending, payments, insurance, and wealth, focused on early stage companies transforming Canada's largest industry. Its investor base is made up of successful, exited Canadian fintech entrepreneurs whose experience and networks are central to how the fund sources and supports companies.

Tal Schwartz is Founder and Investment Lead at North Exit Ventures. He also founded the Canadian Lenders Association, runs the Canadian Finance Summit, and writes the Canadian Fintech Newsletter.

Watch The Full Episode Here: https://www.youtube.com/watch?v=VZLz7BIvjw0