Ohtsuka, the founder of Wado held the menkyo kaidan in Shindo Yoshin Ryu Jujitsu before he began studying Karate under Funakoshi. He also trained under others including Motbu, Mabuni and Konishi. (As an aside, Funakoshi's karate was not called Shotokan at this time - it was named by his students after his death. It means House of Shoto, Shoto being Funakoshi's pen name).
Have a look around this site which contains good info on wado, it's origins, it's founder and the influence of jujitsu on this karate ryu. http://www.wadoryu.org.uk/