CALGARY — High-profile Canadian fintech Neo Financial has raised another $362 million, but with shares issued at a fraction of their previous value, according to public documents—meaning the company’s valuation has dropped substantially.

The majority of the shares the company issued were sold to a single buyer based in China, the documents show.

Neo, a Calgary-based credit card and bank account provider, was last publicly valued at more than $1 billion. The latest raise includes $112 million in equity, and reportedly another $250 million in debt. 

According to a document that outlines recent changes to Neo’s share structure—dated Oct. 9 and posted online by federal regulators—the company earlier this year authorized 35,225,227 Series D shares for about US$5 apiece, well below the US$19 per share it fetched during its Series C fundraising in 2022.

Other public documents reviewed by The Logic show Neo issued $112 million in Series D shares with buyers listed in Canada, the U.S., China, the U.K. and Switzerland. It distributed the stock on Oct. 11.

A single Chinese investor accounted for about $68.8 million—or roughly 60 per cent—of those shares, according to the documents, which were posted to electronic filing system SEDAR. Neo did not respond to The Logic’s inquiry about the investor’s identity.

It was one of several questions The Logic sent Neo on Monday after reviewing public filings that revealed the company had raised new capital. The company declined to answer those questions, and did not make an executive or spokesperson available for an interview.

Hours after The Logic sent Neo its questions, The Globe and Mail and BetaKit reported some details of the deal based on information Neo provided them. 

According to those reports, the Series D round included backing from existing investors, among them Shopify founder Tobi Lütke, Thomvest Ventures—a vehicle of Canada’s wealthy Thomson family—and Silicon Valley venture capitalist Peter Thiel, via his firm Valar Ventures. New investors included Canadian tech entrepreneurs Stewart Butterfield, co-founder of Slack, and David Baszucki, co-founder of Roblox.

Neo executives acknowledged in those media reports that the financing had given the company a lower valuation.

According to the documents The Logic reviewed, $82.5 million of the $112 million worth of shares issued were purchased by foreign investors, including the one in China. Fourteen were listed in the U.S., one in the U.K. and another in Switzerland. The remaining $29.6 million worth of shares was bought by 21 investors in Ontario, B.C., Alberta, Quebec and Manitoba, according to the documents. 

The company’s Series D financing also grants seniority and some voting rights to the latest investors at the expense of earlier backers, according to documents reviewed by The Logic.

Neo’s Series C round, a $185-million deal led by Valar Ventures, catapulted the Calgary company to a valuation of more than $1 billion, and made it one of Canada’s most prominent financial tech firms. 

Led by former SkipTheDishes founders Andrew Chau, Chris Simair and Jeff Adamson, as well as Calgary entrepreneur Kris Read, the company has ambitions of disrupting Canada’s financial sector through a wide range of innovative financial products, particularly those that appeal to younger people. 

The company offers a cash-back credit card backed by ATB Financial and a high-interest savings account backed by Concentra, a Saskatoon-based bank. It also administers a loyalty rewards credit card on behalf of legacy retailer Hudson’s Bay, and in 2023 announced an arrangement with Tim Hortons on the fast food chain’s rewards card. 

Earlier this year, Neo placed No. 1 on The Globe and Mail’s list of fastest-growing startups, reportedly growing its revenues at an astronomical rate of more than 38,000 per cent over the last three years, and topped Deloitte’s similar ranking. 

The steep discount on Neo’s latest shares doesn’t comfortably align with the growth figures it claims. Last year, in an article citing 13 current and former Neo employees, The Logic reported that Neo had struggled to improve low user rates on some of its products, including its in-house credit card and HBC card. 

The price reduction also comes amid a broader spike in down rounds across the tech sector, as many firms cut back their valuations to align with an investment climate that has cooled significantly since a pandemic boom. 

The Logic asked two financial industry insiders to independently evaluate Neo’s latest share authorization, both of whom spoke on condition of anonymity because they were not authorized to speak publicly on the matter. While the Series D share price is significantly discounted, one expert noted, the company’s apparent ability to raise capital despite the current environment points to a vote of confidence on the part of its investors.

The share restructuring raises Neo’s total number of authorized common shares to more than 203,000, up from an earlier amendment that expanded it to just over 112,000, according to The Logic’s analysis of all previous Neo share amendments. 

As part of the new share authorization, Neo also classified the new Series D shares as senior notes, and reclassified all previous shares as junior, reducing those earlier shareholders’ priority should the company decide to liquidate its assets. 

The Series D shares are split into three classes. Neo authorized 4,650,667 Series D-1 shares at a price of US$4.27 per share, according to the document, and 30,574,560 Series D-2 shares at US$5.33 per share. Half of the D-2 shares include voting rights and the other half do not. The three classes equal just under US$183 million in share value.

SEDAR documents show Neo has now issued $112 million of that equity, more of which it could sell in the future. With the latest fundraising Neo revealed on Monday, the company has now raised more than $650 million.

Chau, Simair and Adamson are all listed as Neo directors in the document outlining Neo’s $29.6-million domestic share issuance. The fourth director is named Andrew McCormack. Valar Ventures lists an Andrew McCormack as general partner. 

In the company’s previous stock authorization, Series C shares were valued at US$19.15 each. The latest amendment lowers the price to US$16.01. 

According to PitchBook data, Neo raised an undisclosed sum from two U.S. investors, Florida-based private equity group TLG Capital Management and California-based Evolution VC, in April 2024. 

Neo did not specify whether the April deal is related to the latest Series D authorization, or whether that was a separate bridge financing following its 2022 Series C funding round. Neither Evolution nor TLG responded to The Logic’s request for comment on the structure or value of the funding.