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May 6, 2022

Canadian digital bank Neo raises $145m in Series C round

Canadian digital bank Neo Financial has raised C$185m ($145m) in a Series C funding round at more than C$1bn valuation. 

Valar Ventures led the latest round, which was joined by new and existing investors including Tribe Capital, Altos Ventures, Maple VC, Blank Ventures, Gaingels, and Knollwood Investment Advisory.

Concurrently, Neo had launched a secondary share sale by early investors and employees.

Neo, which aims to become a ‘one-stop shop’ for all financial needs of customers and retailers, will use the proceeds to develop new products for consumers and businesses. 

The digital bank plans to launch a mortgage product later this year and strengthen its position in Quebec.

Additionally, the firm plans to hire 100 people this year for its business in Winnipeg and Calgary.

Services offered by Neo include a savings account, Mastercard-backed Neo Card and a rewards programme.

Founded in 2019, the fintech said it has joined forces with 7,000 local and national retailers.

Furthermore, the digital bank has forayed into the BNPL space, POS financing, co-branded card programmes and subscription-based loyalty services for retailers.

Neo Financial co-founder and CEO Andrew Chau said: “By working with businesses to embed their offerings into the way that consumers shop, Neo is proving to be a powerful financial partner. 

“Today, more than a million Canadians hold an account with Neo, and this investment will allow us to continue pushing the boundaries of financial services and innovate in ways that benefit all Canadians.”

In September 2021, Neo raised $50.59m in a Series B funding round, which was also led by Valar Ventures.

Valar Ventures founding partner Andrew McCormack said: “The pace at which this team releases new products and grows its customer base is among the fastest we have seen in our careers. As a result, Neo can be the biggest disruption the Canadian banking industry has seen in decades, and their influence on financial services available to Canadians will impact the lives of millions.” 

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