A Calgary startup led by two SkipTheDishes founders has raised $25-million from some of North America’s top investors including billionaires Peter Thiel, Peter Thomson and Shopify CEO Tobi Lutke, to build a digital challenger to Canada’s big banks.
Neo Financial Technologies Inc. said Wednesday it had raised $25-million in equity led by Mr. Thiel’s Valar Ventures and backed by funds including Montreal’s iNovia Capital, Mr. Thomson’s Thomvest and Dragons’ Den star Arlene Dickinson’s District Ventures. Other investors include past backers of SkipTheDishes, the Winnipeg-based food delivery service bought by Britain’s Just Eat PLC in 2016, including Toronto’s Golden Ventures, Mr. Lutke and FJ Labs, as well as Afore Capital and Maple VC.
Neo has also secured a $25-million debt facility from ATB Financial, one of two financial institutions – the other is Concentra Bank – with whom Neo is partnering to offer high-interest savings bank accounts backed by the Canada Deposit Insurance Corp.
Neo chief executive Andrew Chau – who, along with chief merchant officer Jeff Adamson were senior executives with SkiptheDishes – said his two-year-old company has built the infrastructure to offer a savings account accessible by smartphone and a Mastercard credit card. It has also signed up 2,000 merchants including e-scooter company Bird, Esso and Guardian Drugs to join a loyalty points program. This week, Neo began formally signing up customers from a waiting list the company says numbers in the tens of thousands.
“We’re here to build a meaningful company and get to millions of users,” Mr. Chau said. “The Canadian banking industry is massive, yet the last meaningful challenger was ING Direct,” which launched in the 1990s and is now called Tangerine Bank and owned by Bank of Nova Scotia. “There is such a huge opportunity to layer technology and essentially rebuild the entire banking stack from the ground up.”
Neo’s savings account pays 1.55 per cent annually – much higher than the big banks – and comes with unlimited transactions and no monthly fees. The company claims it takes customers just three minutes to sign up. Mr. Chau said the company plans to expand its offerings to include mortgages, loans and investing products.