Canada-based digital bank Neo Financial has raised CAD185 million (USD145 million) in a Series C funding round. The bank, which recently surpassed 1 million customers, stated that part of the fund will be used to expand its operations and network.
It offers several financial products such as savings and cash. This is coming after expanding its investment last month, which includes a private wealth management product. The additional capital will also be used to continue the bank’s plans to start offering mortgages before the end of the year. It also plans to launch a “one-stop-shop” for all types of financial services.
The funding round was led by Valar Ventures with CAD 64 million. Other participants include Maple VC, Altos Ventures, Knollwood Investment Advisory, Blank Ventres, and Tribe Capital.
The fundraising round also includes the offering of a secondary share, which enabled employees and early investors to sell a portion of their shares to new investors.
The fund will also be used to expand Neo’s team in Calgary and Winnipeg. It will also enter into more partnerships with retailers.
Neo Expands Partnerships
As a way of expanding its financial offerings, Neo has partnered with several firms and organizations. This includes various retailers such as Boston Pizza, H&R Block, Home Depot, Goodfood, and Hudson’s Bay. The collaboration aims to enable retailers to look for ways of monetizing their finance offerings and loyalty programs.
Additionally, Neo has added more products to its services, including buy now pay later (BNPL), subscription loyalty services, installment financing point of sale, as well as co-branded cards.
Neo Financial launched the Neo card in 2020. The card has no fees and it allows users to earn at least 1% for all spending and 6% at partnering retailers.
Chief Executive Officer of Neo Financial Andrew Chau stated that the bank was launched to compete strongly with the five big banks that control about 90% of Australia’s market share.
He added that the bank has successfully built top-quality products and is offering seamlessly integrated experiences. “We built our entire financial infrastructure, our banking core, from scratch,” Chau added. It has given the bank the advantage to motivate quickly and generate a wide range of product velocity.