KOHO, a Toronto-based fintech company offering Canadians a no-fee alternative for spending, saving, and building credit, has closed a $130 million CAD funding round. The company, founded in 2014 by Daniel Eberhard, is using the raise to pursue a federal banking licence — a step that would move it from the edges of Canada's financial system toward its centre.
Canada's banking sector is unusually concentrated. The Big Six banks control over 90% of the country's banking industry assets, leaving little room for new entrants to compete on fees, interest rates, or product design. A senior Bank of Canada official has publicly described the system as an "oligopoly" and called for more competition. That kind of statement from a central bank regulator is uncommon, and it reflects a growing conversation in Canada about whether the current structure serves consumers well.
The round values KOHO at $1.33 billion CAD and brings its total funding to $507 million CAD. New investors include Mubadala, the Abu Dhabi-based sovereign investor managing over $385 billion USD in assets and the world's leading sovereign investor by capital deployed in 2024; Savano Capital, a Baltimore-based growth-stage firm; Tobi Lütke, founder and CEO of Shopify; and Michael Linford, COO of Affirm. Existing backers Portage Ventures, Drive Capital, BDC Capital, HOOPP, and Eldridge also joined the round.
The main purpose of this raise is to build the capital required to apply for a federal banking licence in Canada. Right now, KOHO operates under a payments model, meaning it relies on banking partners to hold customer deposits and issue certain products. A banking licence would change that. KOHO could hold deposits directly, develop its own financial products, and operate under a higher level of regulatory oversight than fintech companies typically have. That status also tends to reduce operating costs, which KOHO says it would pass on to users through better rates and more flexible options.
Mubadala's participation is worth noting for context. The Abu Dhabi sovereign fund manages a broad portfolio across the UAE and internationally, with the stated goal of generating long-term financial returns for the Abu Dhabi government. It has invested in fintech and technology companies globally, and its presence here gives the round a degree of institutional weight that distinguishes it from earlier KOHO raises. Lütke and Linford, for their part, come from operational backgrounds: both have built or helped scale large financial and commerce platforms, which makes their involvement somewhat different from a purely financial backer.
Obtaining a banking licence in Canada takes time. KOHO says it has been working through the regulatory process and that this round provides the financial base to move forward. Final approval would require sign-off from the relevant federal minister.
"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. We've spent years earning the trust of Canadians who deserve better from their financial institutions, and this investor group reflects a shared belief that we're just getting started. We've focused on building the infrastructure, the regulatory relationships, and the trust with Canadians to do this right. 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." — Daniel Eberhard, CEO and founder of KOHO
Not all of the funding is reserved for the licence process. KOHO will also invest in its existing product range: spending and savings accounts, credit-building tools, its overdraft protection product Cover, and a recently launched crypto offering. The company plans to develop each product line further while the regulatory work continues in parallel.
A banking licence would expand what KOHO can actually offer. Today, the company works through partner banks to hold funds, which adds costs and limits product options. With a licence, it could offer interest-bearing accounts under stronger consumer protections and reach more Canadians, including those who are not well served by either traditional banks or existing fintech products. Hiring and scaling operations are also expected as part of the transition.
KOHO has grown at a measured pace since launch. Reaching 2.5 million users took more than a decade, which in fintech terms is not fast. But building regulatory credibility takes time, and the company appears to have prioritised that over rapid user growth.
KOHO was founded in 2014. The core product is an app and prepaid Mastercard that lets users manage day-to-day spending with no hidden fees. Alongside the account, the company offers Credit Building, which helps users establish or improve their credit history; Cover, for short-term overdraft protection; and RoundUps, which automatically sets aside small amounts into savings. The app is aimed at Canadians who find traditional banking either too expensive or too complicated.
Eberhard has led the company since founding, growing it to over 2.5 million users. KOHO is a registered member of Payments Canada. Its focus has been the broad consumer market rather than any particular niche, which is part of why obtaining a bank licence matters: full banks can offer products and reach customers that a payments-only fintech cannot.
This $130 million CAD raise brings KOHO's total capital to $507 million CAD. Alongside Mubadala, Savano Capital, Tobi Lütke, and Michael Linford, the round includes returning institutional investors: Portage Ventures, a fintech-focused fund; Drive Capital, a Columbus-based growth investor; BDC Capital, the venture arm of Canada's federal development bank; HOOPP, the Healthcare of Ontario Pension Plan; and Eldridge Industries.
