Digital bank Neo Financial Technologies Inc. has tapped big tech names in its latest investment round of $360-million, announced on Monday. The company was founded by CEO Andrew Chau (C), Jeff Adamson (L) and Kris Read, pictured here at their Calgary headquarters in February, 2020.Todd Korol/The Globe and Mail
Digital bank Neo Financial Technologies Inc. has once again tapped some of biggest names in technology to raise hundreds of millions of dollars in new financing.
Calgary-based Neo announced a $360-million investment round on Monday, consisting of $110-million in equity and $250-million in debt. Silicon Valley billionaire Peter Thiel’s Valar Ventures, which led the company’s three previous funding rounds, is participating in the latest financing alongside Neo’s other high-profile existing investors, such as Shopify founder Tobi Lütke, Golden Ventures, Afore Capital, and Thomvest Ventures. (Peter Thomson, founder and chairman of Thomvest, is also co-chairman of Woodbridge Co. Ltd., which owns The Globe and Mail.)
New investors joining this fundraising round include Slack co-founder Stewart Butterfield, online gaming platform Roblox Corp. co-founder David Baszucki, and PointClickCare co-founder Mike Wessinger. In total, Neo has now raised more than $650-million over four funding rounds since the company was founded in 2019.
“These are operators and tech entrepreneurs who have built multi-multi-billion-dollar companies from the ground up,” Jeff Adamson, Neo’s co-founder and chief commercial officer, said in an interview. “They also are people who get hit up all the time.”
Mr. Adamson and Neo chief executive officer Andrew Chau previously co-founded popular online food ordering service SkipTheDishes before launching Neo. Since then, Neo has experienced truly exponential growth, with revenue over the past three years increasing by 38,431 per cent, leading Neo to be named number one on the sixth annual Report on Business ranking of Canada’s Top Growing Companies in September.
When the company last raised money in 2022, Neo was valued at over $1-billion, though Mr. Adamson said the investments announced on Monday were “at a lower watermark.”
“It is below our previous round, but it is a totally different market than it was in 2022, we have had 154,000 per cent revenue growth since 2020 and to grow that quickly in financial services is really unprecedented,” he said.
“For us it was really about how do we bring in the right investors who are fully aligned with the opportunity in Canada. That is what really mattered a lot to us, and things like the valuation really take care of themselves.”
The company has more than one million customers and 750 employees spread across its offices in Calgary, Winnipeg and Toronto. Neo partners with retailers across Canada to offer no-fee, cash-back Mastercards that are issued by Alberta government-owned ATB Financial and come with a loyalty program that works across all its other retail partners.
Hudson’s Bay Co. was among the first retailers to partner with Neo in 2021, but the list has expanded rapidly, surpassing 4,000 by the end of that year and reaching 7,000 by mid-2022. Today, Mr. Adamson said Neo has more than 13,000 retail partners.
“With our World Elite Mastercard, for example, people can get up to 9-per-cent cash back on groceries,” he said. “We can make the deposit products work with the credit products like no one else in Canada can.”
Neo has started to move beyond credit cards and currently offers high-interest savings accounts through Peoples Bank of Canada and has also partnered with investment startup OneVest to offer wealth management services. In May, 2023, Neo launched a mortgage product that offers a fully digital application experience the company claims can be completed in five minutes.
“The banking system in Canada has largely been unchanged for over 150 years, it is literally frozen in time,” Mr. Adamson said. “We really want to build the Apple ecosystem of banking and what that really means is that the products are beautifully designed, they work well together and they get better the more products you have.”
