Varcoe: Neo Financial Hits $1 Billion ‘Unicorn’ Valuation

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“It’s really a validation for the tech ecosystem here that we’re building in Calgary,” Neo CEO Andrew Chau said.

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Can unicorns gallop? In the case of Neo Financial, that certainly seems to be the case.

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The Calgary-based tech startup will announce on Thursday that it has completed a new $185 million fundraising round, bringing the total amount of capital it has attracted to more than $299 million since its inception.

The financial services firm also joins a small but growing group of tech companies in Calgary that have achieved rare “unicorn” status with a valuation of over $1 billion.

And it’s done in less than three years.

Neo Financial is one of the fastest growing Canadian startups to reach this gateway, joining Solium Capital (now Shareworks of Morgan Stanley), Benevity, RS Energy Group and Parvus Therapeutics as local companies with a unicorn valuation .

All have cleared this hurdle since 2019.

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“It’s really a validation for the tech ecosystem here that we’re building in Calgary,” Neo CEO Andrew Chau said in an interview.

“At the end of the day, what we’re building here at Neo isn’t (designed) to build overnight success, is it? It’s really about building a generational business that can outlive us. to all.

“It’s about creating an iconic brand that all Canadians use, and this milestone of reaching a billion-plus dollar valuation is really just a stepping stone to something much bigger.

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Neo Financial was founded in 2019 by Chau, Chris Simair and Jeff Adamson – the three were co-founders of Winnipeg-based SkipTheDishes, which sold for $200 million six years ago – along with Kris Read.

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Neo’s growth outside Western Canada was meteoric, with Chau holding the first meetings at the downtown Calgary library as the company made its initial plans.

Its mission has been to disrupt the traditional financial market and compete with banks and institutions using the power of technology.

It now has more than one million customers and offers a no-annual-fee MasterCard and a high-interest Neo savings account. Last year, it partnered with retail giant Hudson’s Bay Co. to provide a branded credit card.

Other partnerships include H&R Block, Boston Pizza and Home Depot, and it has 7,000 local and national retailers on its platform.

To fuel growth, the company has been hiring at a rapid pace. It now has over 650 people working between its offices in Calgary and Winnipeg. Neo also has over 100 open positions.

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In January, the company planted its flag in the city’s downtown core, leasing more than 110,000 square feet of downtown office space in two buildings, including the fourth floor of the iconic Bay Area building. from Hudson on 8th Avenue SW.

“Our mission and our ambition with Neo. . . is to be that one-stop-shop for all financial services for Canadians,” he said.

“It’s really about capturing all of that end-to-end financial experience for Canadians, whether it’s getting their first bank account, helping them save, spend and invest – or even buy a house – to be able to use technology to seamlessly integrate all of these products.

Neo Financial CEO Andrew Chau pictured in the company's offices on the fourth floor of the Hudson's Bay Company building.  A few months ago, the floor housed the women's clothing department.
Neo Financial CEO Andrew Chau pictured in the company’s offices on the fourth floor of the Hudson’s Bay Company building. A few months ago, the floor housed the women’s clothing department. Photo by Gavin Young /Postmedia

New York-based venture capital fund Valar Ventures, which was co-founded by billionaire Peter Thiel, led the Series C funding round at Neo.

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The additional investment will help the fintech company hire more staff and expand the company’s product offering; Neo will launch a mortgage product later this year.

“The pace at which this team is launching new products and growing its customer base is among the fastest we’ve seen in our careers,” Valar Ventures founding partner Andrew McCormack said in a statement.

“As a result, Neo may be the biggest disruption the Canadian banking industry has seen in decades.”

The latest round of funding comes as a number of Alberta tech companies are gaining momentum and attracting new investors.

Last year, Alberta-based startups attracted $561 million in venture capital, up 16% from the previous year, according to a report by the Canadian Venture Capital Association.

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So far this year, venture capital funding for businesses has topped $334 million, including recent rounds involving Calgary companies like Athennian, Helcim and Validere, according to data from Start Alberta.

Neo’s rapid evolution into a unicorn means local tech companies don’t have to leave town to find staff or grow quickly to capitalize on an opportunity, said Brad Parry, CEO of Calgary Economic Development.

“Neo was barely a business three years ago and look at it now. . . our fifth unicorn in the last two and a half years. And there are a few more to come,” he said.

“It just sends the message that Calgary is the kind of place where you can build a unicorn in record time.”

Neo Financial offices on the fourth floor of the Hudson's Bay Company building in downtown Calgary.  A few months ago, the floor housed the women's clothing department.
Neo Financial offices on the fourth floor of the Hudson’s Bay Company building in downtown Calgary. A few months ago, the floor housed the women’s clothing department. Photo by Gavin Young

Neo’s sudden growth comes as no surprise to those who have worked closely with its management team in the past.

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Company executives understood what it would take to successfully grow, said Arlin Dueck, who was director of talent acquisition at SkipTheDishes and is now executive director of talent at Calgary-based Harvest Builders, who recruits staff for Neo.

“It has done them tremendous good to take all the lessons, all the successes, but perhaps just as important, the failures that they would have experienced on a day-to-day basis at Skip, and to be able to apply that knowledge and experience directly in this business. “, did he declare.

Chau, who grew up in Saskatoon and moved to Calgary about four years ago, noted that big international tech companies have come to the country and built big brands that have had an impact on Canadians.

The 34-year-old leader wants Neo to do the same, based in Western Canada and operating in the financial field.

“We can build these meaningful businesses here in Calgary. We are capable of having the talent,” he added.

“Calgary is a unique market. It’s one of those places where we have such a great culture in terms of the ambition we pursue.

Chris Varcoe is a columnist for the Calgary Herald.

cvarcoe@postmedia.com

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