Calgary fintech Neo Financial has raised $68.5 million in a round led by a syndicate of more than 100 Canadian investors, at a higher valuation than it fetched in its $362-million Series D round led by China’s Tencent in the fall of 2024.
Alberta Investment Management Corporation, Northleaf Capital Partners, Plaza Ventures, Sandstone Asset Management and Caldwell Growth Opportunities Fund participated in the round, according to a release. Neo also raised money from investors in the U.S. and Switzerland, filings show. The company plans to use the money to bundle up its loans and sell them to investors, which it said in a release will help it grow its lending portfolio to billions of dollars without relying on investors’ money for capital.
Talking Points
In an interview, Neo co-founder and chief commercial officer Jeff Adamson said Neo will be the first fintech in Canada to use the strategy, which is similar to that used by big banks. “It allows us to say yes to more Canadians, offer more aggressive rates to Canadians, which is incredibly important as Canadians are getting pinched,” he said.
Filings show Neo sold about 9.4 million Series D senior preferred shares, split across two classes with different prices and voting rights, in mid-December and late January. The fintech in December also authorized the issuance of an additional 9.8 million of Series D senior preferred shares, as well as 17.5 million new common shares and about 640,000 new Series C shares. In an emailed statement, Adamson said the company hasn’t sold any additional shares in this round beyond those that brought in the $68.5 million.
In November 2024, The Logic reported that Neo sold about 60 per cent of the $112 million in shares it issued as part of its Series D round to a single undisclosed buyer based in China. The Globe and Mail subsequently reported that the buyer was Chinese tech giant Tencent. Tencent held a roughly 10 per cent stake in Neo following the deal, according to the report.
The 2024 Series D round valued Neo significantly lower than its Series C round led by Peter Thiel’s Valar Ventures, which catapulted it to a $1-billion valuation and made it one of Canada’s most prominent fintech firms. Filings show the shares sold in this round were priced the same as they were in the 2024 round, but Adamson said the new financing values Neo at a higher price than its 2024 Series D.
In January of last year, the U.S. Defense Department blacklisted Tencent and a handful of other well-known Chinese companies on national security grounds. U.S. intelligence agencies have long claimed that Chinese technology companies pose a national security threat given their close proximity to other sectors and government bodies, including the country’s defence forces.
Canadian regulators, meanwhile, are tightening oversight of foreign investment in fintechs, requiring national security reviews before payments companies can register under the Bank of Canada’s new supervisory mandate. That’s a necessary step to access the forthcoming Real-Time Rail instant payments system and the open banking data sharing framework. The Bank of Canada announced Tuesday that Neo’s application for registration has been approved.
Asked what Tencent’s stake is in Neo following this latest funding round, Adamson said “Neo is majority owned by Canadian and American investors and is a Canadian-controlled business.”
In a statement to The Logic in January 2025, a Neo spokesperson said Tencent made the investment passively and that the company doesn’t have any governance rights, board seats or access to clients’ customer data or personal information. Tencent has denied connections to the Chinese military and said its inclusion on the U.S. blacklist was a “mistake.”
Optimism and funding have been returning to Canada’s fintech sector after a post-pandemic deep freeze. International companies like Revolut and Robinhood are preparing to enter the Canadian market, while policymakers and regulators are backing measures aimed at boosting competition and productivity in the face of a U.S.-led trade war.
In October, Neo competitor Wealthsimple raised $750 million at a $10-billion valuation, disclosing its client assets had hit $100 billion three years earlier than it had forecast.
Correction: Neo’s application for registration as a payment service provider with the Bank of Canada has been approved. This story has been updated.
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