Neo Financial described the structure as a first of its kind for a Canadian fintech
Neo Financial has raised $68.5m in equity to fund its inaugural securitization program, drawing capital from Alberta Investment Management Corporation (AIMCo), Northleaf Capital Partners and a broad group of Canadian investors.
Reuters reported that the Calgary-based fintech described the structure as a first of its kind for a Canadian fintech.
The oversubscribed round included a syndicate of more than 100 Canadian investors, founders and entrepreneurs, alongside institutions such as Plaza Ventures, Sandstone Asset Management and Caldwell Growth Opportunities Fund.
According to Reuters, Neo has now raised more than $700m to date, with prior backing from Tencent and Shopify CEO Tobi Lütke.
Neo plans to use the new capital to securitize its credit assets and reduce its reliance on equity-funded lending.
The firm said this structure will allow it to expand its lending portfolio to the scale of billions of dollars while aligning its credit modelling and risk practices with standards used in Canada’s Tier 1 banking sector.
The company said its AI-driven credit models underpin the securitization program and support risk assessment and underwriting for the vehicle.
Neo added that the program will support the growth of its credit-card portfolio in Canada.
Neo Financial aims to build “a generational company that is made in Canada, for Canadians,” co-founder and CEO Andrew Chau said.
He added that securitization lets the company expand its reach and that support from more than 100 entrepreneurs and institutional leaders will help fund its next phase of growth.
Neo, founded by three co-founders of SkipThe Dishes, operates in a market where Canada’s big six banks continue to dominate retail financial services.
Reuters said the company’s valuation at the end of its previous funding round in 2024 was at a steep discount.
Co-founder Jeff Adamson told Reuters the latest round is at a higher valuation than that 2024 raise, but did not disclose specific figures.
