Canadian startup Neo Financial raises $50 mn in Series A funding & debt financing

By Pavithra R

Neo Financial, modernizing everyday banking and rewards in Canada has announced raising $25 mn Series A fundraising round alongside $25 mn in debt facility financing, bringing this funding round total to $50 mn CAD.

Valar Ventures, a U.S. based venture capital firm, led the funding round. Amidst an unprecedented year, the investment marks one of the largest Series A funding rounds in Western Canada. Other Series A investors included Tobi Lutke, the CEO and founder of Shopify; Inovia Capital; Thomvest; FJ Labs; Afore Capital; Golden Ventures; Maple VC; and District Ventures, the venture firm founded by Arlene Dickinson from Dragon’s Den. Neo has also closed a $25 mn debt facility with financial partner, ATB Financial.

“With the tremendous support of our investors, particularly through the challenging circumstances of COVID-19, we’re accelerating the development of Neo’s product offerings and expansion across Canada. Now more than ever we are seeing the need for digital transformation in industries like banking, and Neo is at the forefront of that in Canada. Our team has set out to not only build new technology that challenges Canada’s existing financial sector, but also drives a cultural shift in how Canadians bank,” said Andrew Chau, Neo co-founder and CEO.

Founded in 2019 by co-founders of SkipTheDishes, Neo is a technology company that’s building a better financial experience for all Canadians. In a country where the Big Five banks own 90% of the market share, Neo was built to bring much-needed innovation and choice to consumers in Canada. The FinTech is reimagining spending, savings, and rewards by using its proprietary technology to simplify finances, create rewarding experiences, and build community for all Canadians.

Neo offers Neo Savings, a high-interest savings account that earns members up to 30 times more than the Big Five banks, and the Neo MasterCard and Rewards program that unites spending and savings together on a single seamless platform. Neo’s credit card is issued by ATB Financial and backed by the Mastercard network, and the Neo Savings account is provided by Concentra Bank. The firm is planning to use the finance to continue serving the increasing demand for financial innovation and optionality in Canada.

“We’re excited to partner with the team building Neo Financial. They are building a powerful technology platform which provides the modern banking services consumers around the world have come to expect – and are still not getting from the traditional banks in Canada. We see massive opportunities for new entrants in the banking industry globally, particularly in places dominated by a few old banks that have gotten too comfortable and forgotten how to innovate. Neo’s unique approach will have a significant impact for consumers all over Canada who are ready for a financial platform that works for them,” said Andrew McCormack, a founding partner of Valar Ventures.