KOHO has raised $130 million as the Canadian fintech company moves closer to its goal of becoming a federally regulated bank.
The financing brings KOHO to a $1.33 billion valuation and provides what the company describes as the initial capital base for a federally regulated bank. KOHO said the milestone would allow it to deepen and expand its mission to provide millions of Canadians with better financial solutions.
The round includes new backing from Mubadala, the Abu Dhabi sovereign wealth fund with more than USD $385 billion in assets, and Savano Capital, a Baltimore-based investment firm focused on high-growth, expansion-stage businesses.
Prominent operator-investors Tobi Lütke, founder and CEO of Shopify, and Michael Linford, COO of Affirm, also participated in the financing. Existing investors Portage Ventures, Drive Capital, BDC Capital, HOOPP, and Eldridge also joined the round.
KOHO said it has been working through the regulatory process to obtain a banking licence. With the round now closed, the company says it has the capital base to make a substantive step toward securing a banking licence in Canada, subject to ministerial approval.
“This raise reflects the conviction — from our team, our users, and now some of the world’s most credible investors — that Canada’s financial system needs to work better for more people,” said Daniel Eberhard, CEO and founder of KOHO.
Eberhard said KOHO has spent years earning the trust of Canadians while building the infrastructure and regulatory relationships required to pursue its next stage of growth.
“The investor group we’ve assembled reflects a shared knowledge that the next great Canadian bank needs to be built differently, and that KOHO is the team to build it,” he said.
The new capital will also support KOHO’s continued growth across its core product suite, including spending and savings accounts, credit-building tools, overdraft protection, and its recently launched crypto offering.
Since launching in 2014, KOHO has grown to serve more than 2.5 million Canadians and has raised $507 million CAD to date.
Becoming a federally regulated bank would allow KOHO to go further for its customers, the company said, with lower costs, greater product flexibility, and stronger consumer protections for Canadians.
For KOHO, the financing represents another step in its evolution from challenger fintech to a potential regulated banking institution. For Canada’s fintech sector, it marks a notable moment in the long-running effort to bring more competition and consumer choice to financial services.
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