Neo Financial raises another $64 million

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This article was published 15/09/2021 (1649 days ago), so information in it may no longer be current.

Neo Financial, the virtual banking company founded in 2019 that is gaining traction among millennials and others, has just raised another $64 million.

It is one of the largest venture capital raises for a Canadian fintech company. The Calgary-based company, created by two founders of SkipTheDishes, closed a $50-million round of financing only last December.

Andrew Chau, Neo’s chief executive officer and co-founder of Skip, said the company’s offerings like four-to-six per cent cash back from thousands of retailers on purchases with its no-fee Mastercard credit card has generated significant growth over such a brief period of time, which has helped attract the additional investment.

The financing was led by Valar Ventures, as was the previous round. New York-based Valar invests in fintech startups around the world.

Chau said the financing means the company can keep its “heads down and grow the company.”

In addition to cash-back from a retailer network that has grown to more than 4,000 from about 1,500 at the beginning of the year, its banking services also includes one of the highest rates for savings accounts in the country — 1.5 per cent — and includes unlimited no-fee chequing and all the e-transfer options people expect from a traditional chequing account.

Neo does not disclose the amount of assets under administration or the size of the deposits taken, but Chau said growth to date has exceeded expectations.

“As a result of that we have had quite a bit of demand and traction,” said Chau. “We’ve grown our customer base as well as our retail partnerships.”

He said they are adding a “few hundred” new retailers every month.

The company recently opened a Winnipeg headquarters in Exchange District offices that were formerly occupied by SkipTheDishes.

That office already has about 30 employees with plans to increase its Winnipeg office to about 300 over the course of the next five years. Its total workforce is just over 350 today, almost triple the size of a year ago. The company currently has 75 positions to fill throughout its operation.

It will now focus on launching new integrated fintech partnerships with retailers and plans to go beyond savings accounts and credit cards to launch new products.

Its services are now available across the country, including Quebec. As an indication of the traction it is getting in the market it recently partnered with the Hudson’s Bay Co. and its two million cardholders.

Andrew McCormack, a founding partner of Valar Ventures, said, “We are more and more impressed by the team at Neo Financial. The pace at which they have built and continue to expand their technology, platform, and new enterprise partnerships is among the fastest we have seen in our careers.”

Chau said the expectation is that this pace of growth will continue.

martin.cash@freepress.mb.ca