Canadian challenger bank Koho Financial has secured $130 million CAD in Series E financing as the FinTech company continues its quest to obtain a federal banking licence.
The all-equity round, which Koho closed in recent weeks and announced on Thursday, provides the initial capital base the company requires to become a federally regulated bank, and cash to invest in continued growth. It comes at a post-money valuation of $1.33 billion, officially granting Koho—which was last publicly valued at $800 million—unicorn status.
CEO Daniel Eberhard wants Koho to build Canada’s “next great bank.”
In an interview with BetaKit, Koho co-founder and CEO Daniel Eberhard said he is both humbled by this milestone and aware of how far the nearly 12-year-old company still has to go to execute on its vision of building a true challenger capable of bringing more competition to Canada’s highly concentrated banking sector.
“It’s nice validation,” Eberhard said. “Both the quality of the investors who are coming in and valuation itself [are] a testament to what we’ve done. But there’s much more work in front of us than behind us.”
Adam Felesky, co-founder and CEO of longtime Koho investor Portage, told BetaKit over email that this round “reflects that Koho continues to build a product that millions of Canadians use to manage their daily financial lives.” He is excited by the capabilities Koho could offer those customers if it becomes a chartered bank.
Koho’s Series E, which brings the company’s total funding to $507 million, adds Abu Dhabi sovereign wealth fund Mubadala, Baltimore-based Savano Capital, Shopify co-founder and CEO Tobi Lütke, and Affirm COO Michael Linford to its cap table.
Existing investors, Toronto-based Portage, Business Development Bank of Canada investment arm BDC Capital, the Healthcare of Ontario Pension Plan, Columbus-based Drive Capital, and New York City’s Eldridge also participated. Koho did not disclose which investors led or supported this financing. While that $130 million is entirely primary capital, Koho also held a “relatively small,” additional, undisclosed secondary sale for employees.
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Founded in 2014 in Vancouver, with operations in Toronto, Eberhard said the 250-person company is now generating around $250 million CAD in annual revenue and growing 50 percent year-over-year.
This round comes as Koho navigates “the final stages” of obtaining a Schedule 1 banking licence in Canada—a pursuit it initiated five years ago and first revealed in 2024. Last year, Toronto-based FinTech firm Questrade obtained such a licence following a six-year process.
Canada’s banking industry is dominated by the country’s six largest banks. To date, Koho’s financial innovation efforts have been confined to user experience and product construction. Eberhard has told BetaKit that gaining access to the same playing field as banks would allow it to “innovate at an infrastructure level” and build better deposit and lending products for Canadians and lower its cost of capital.
“It’s been a long journey,” Eberhard said. “We’re excited because it’s the last big piece of the puzzle for us.”
David Merriby, ex-chief compliance officer at Capital One and Amex Bank of Canada, joined Koho in March as chief compliance and risk officer to lead the company’s efforts to become a bank, stepping in for former Koho chief banking officer Peter Aceto, who left in 2024.
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The CEO said Koho measures its impact based not on valuation but on how many Canadians have chosen the company’s FinTech products. On that front, the company has surpassed 2.5 million clients—up from one million in late 2023. The average Koho customer uses three of the company’s offerings, which span spending, saving, borrowing, budgeting, and others.
Koho has broadened its financial services app to include a prepaid Mastercard, a line of credit offering, and international money transfers, as well as credit history building, tenant insurance for renters, and cryptocurrency. It has also outlined plans to eventually move into telecom. But like many FinTech firms, Koho has needed to rely on third-party partnerships with regulated players to deliver those products.
Eberhard said there are still millions of Canadians who lack the banking options that they deserve, and key financial offerings Koho does not yet provide. A bank licence would let the company deliver them.
“Enormous amounts of Canadians’ wealth are eroded by suboptimal financial setups,” the CEO said. “It’s very difficult to have agency if you don’t have financial stability.”
Eberhard estimated that building a business capable of changing that “takes a generation.”He added that he thinks Koho has the chance to become Canada’s “next great bank.”
For his part, early Koho investor Joe Canavan told BetaKit he believes Eberhard is building “a generational winner.”
Feature image courtesy Koho.