With millions in new funding, securitization on the horizon, and big, institutional players at its flank, Tuesday’s fundraising announcement from Neo Financial begs a question: Is the FinTech company signalling a move toward becoming a bank? Co-founder and chief commercial officer Jeff Adamson isn’t saying one way or another.
The move—and institutional backing—come at a time when some Canadian FinTech companies are seeking traditional banking licenses.
It’s a fair question to be asking, however, after the company founded by former SkipTheDishes alumni announced on Tuesday the launch of a securitization program that looks a whole lot like how most big banks increase their lending capacity.
Neo says securitization will allow it to fund further growth by turning existing credit assets into liquidity. In lay terms, the company can bundle credit balances and sell future repayments to investors to provide upfront capital that can, in turn, be used to issue more credit and grow the business. It’s a common practice among Canada’s Big Six banking institutions.
The move comes on the heels of a $68.5 million CAD fundraising round that closed in mid-January. The round was filled with major institutional investors like the Alberta Investment Management Corporation (AIMCo), Toronto’s Northleaf Capital Partners, Sandstone Asset Management, Plaza Ventures, and Caldwell Growth Opportunities.
Co-founder and chief commercial officer Jeff Adamson told BetaKit this equity round was almost entirely Canadian-funded. That’s a stark departure from the company’s 2024 Series D announcement, which raised eyebrows when Neo stated it was largely financed via an undisclosed Chinese investor. The Globe and Mail later revealed that backer to be Chinese tech conglomerate Tencent, prompting speculation over whether the company remained majority Canadian-owned.
According to securities filings viewed by BetaKit, around $3.4 million of this latest round was foreign investment from the US and Switzerland.
The move—and institutional backing—come at a time when some Canadian FinTech companies are seeking traditional banking licenses and the legitimacy they can impart. It also comes as the Canadian government moves toward a consumer-driven open banking model to increase competition and access for non-traditional financial organizations.
Despite looking like a company primed to ride the FinTech-to-banking pipeline that so many of its peers have been chasing in recent years, Adamson said the move doesn’t necessarily mean Neo Financial has plans to follow suit with companies like Questtrade and KOHO, which have both taken steps to seek bank licensing.
“In one way … It’s a recognition of the maturity of the business. Something like that would accelerate the approval of a banking licence,” he said. “On the other hand … if you’re getting access to bank-like costs of funding already, then why bother? Why not just continue operating as a technology company and continue to grow through these types of partnerships?”
A marriage of convenience
Securitization of the company’s credit assets will also allow Neo access to more stable funding, the company said, rather than being constrained by equity-funded lending.
Beyond the benefits Adamson says securitization will provide for the company, he argues the marriage of traditional banking funding models with Neo’s technology brings potential benefits for its current customer base of more than one million, and for the nearly 20 million potential customers in Neo’s addressable market. Those benefits might look like more dynamic pricing across clients or access to lending for customers who might otherwise be rejected by traditional banks.
“A lot of people just end up getting rejected because they don’t fit into these conventional boxes … a classic example would be an entrepreneur or small business owner without a traditional credit history,” he said, adding that securitization will allow Neo to further lend to those middle-class Canadians.
Andrew Chau, co-founder and CEO of Neo Financial, said in a release that this round of fundraising signals “a massive vote of confidence” for the company’s next phase of growth and its ability to challenge Canada’s traditional financial sector.
“By unlocking the power and scale of securitization, we can challenge the financial status quo that has been holding back Canadians’ financial progress for decades,” he said.
Since its inception, Neo Financial has raised more than $650 million CAD, including debt and equity, and was valued at more than $1 billion CAD as of its Series C deal in May 2022. However, Neo’s November 2024 Series D raise—reportedly led by Chinese investor Tencent—reduced its valuation to $510 million USD post-money, according to The Globe and Mail. It landed on The Globe and Mail’s first-place slot for Canada’s top growing companies in 2024, as well as that same number one spot on Deloitte’s Technology Fast 50 program the same year.
BetaKit’s Prairies reporting is funded in part by YEGAF, a not-for-profit dedicated to amplifying business stories in Alberta.
CORRECTION (02/03/2026): This article has been updated to clarify that Neo Financial’s customer base is more than one million users and its total addressable market is nearly 20 million.
Feature image courtesy Neo Financial.