Investment in Canadian fintechs remained robust in H1'25 amid global volatility Français

Cision Canada

3 days ago

Digital assets and AI-focused fintechs accounted for the majority of investments in the first half of 2025, KPMG International's Pulse of Fintech report shows
TORONTO, Aug. 19, 2025 /CNW/ - After hitting a record high last year, Investment in Canadian fintechs fell in the first half of 2025 but remained relatively robust amid heightened uncertainty from the U.S. trade war and volatile markets, according to KPMG International's Pulse of Fintech H1'25 bi-annual report.
A total of US$1.62 billion was invested in Canadian fintechs across 60 deals in the first half of the year, down significantly from the record US$7.5 billion invested in the second half of 2024 and the US$2.4 billion invested in the first half of last year, according to data compiled by PitchBook for KPMG International. Deal counts include mergers and acquisitions, private equity and venture capital.
On a global scale, fintech investment fell from US$54.2 billion across 2,376 deals in H2'24 to US$44.7 billion across 2,216 deals in H1'25.
Dubie Cunningham, a Partner in KPMG in Canada's Banking and Capital Markets Practice who specializes in fintech says the drop in investment activity in H1'25 should be seen as normalization rather than waning investor interest in fintechs, as last year's record high was anchored by two large mega deals.
"Last year was exceptionally strong for fintech investment, thanks to two major take-private deals. Since then, investment activity has dropped to more stable levels. In fact, when you consider the economic shifts such as tariffs effecting global trade, investment in the first half was quite robust compared to historical levels," Ms. Cunningham notes.
"There's still a lot of dry powder ready to be deployed by investors, but they are demonstrating more selective behaviour than in previous years. They're looking for quality companies and we're seeing longer tails for maturing mid-to-large stage private equity deals," she says.
The largest deal in Canada – and eighth largest globally – was the US$916.5 million (CAD$1.3 billion) buyout of Gatineau, Quebec-headquartered IT consulting firm Converge Technology Solutions by H.I.G. Capital, a Miami-based private equity firm. The second largest deal was the US$201.5 million acquisition of Toronto-based Payfare Inc. by Fiserv, Inc.
Ms. Cunningham says such deals show acquirers in the fintech space have shifted their focus. "Investors are eschewing speculative investments and future growth prospects for companies that have strong underlying fundamentals, sustained profitability and growing market share."
Edith Hitt, a partner in KPMG in Canada who leads the Digital Financial Services Transformation team in Québec says that even though Canada accounts for 2.7 per cent of global fintech deal count and 3.7 per cent of total disclosed value, "Canada is small but meaningful slice of global fintech – punching slightly above its weight on deal size and late-stage/buyout presence when big events occur."
Pulse of Fintech H1'25 highlights
US$1.62 billion was invested in Canadian fintechs across 60 deals
In Q1, US$392.7 million was invested across 35 deals
In Q2, US$1.2 billion was invested across 25 deals
US $498.2 million was invested across 45 venture capital investments
In corporate venture capital, US$278 million was invested across 17 deals
Globally, US$44.7 billion was invested across 2,216 deals
The Americas attracted US$26.7 billion of investment across 1,092 deals
The U.S. accounted for US$20.9 billion of total investment in the Americas
VC activity dips
The first half of the year saw venture capital investment values drop four-fold from the prior half, though the number of deals remained relatively steady. In H1'25, venture capital investors poured US$498.2 million into 45 deals, down from US$864.4 million across 40 deals in H2'24.
The largest venture capital investment was Winnipeg-based financial planning platform Conquest Planning's US$80 million Series B raise, led by Growth Equity at Goldman Sachs Alternatives.
"The fallout from the U.S. trade war cast a chill on venture capital investments, but we expect activity to bounce back in the second half of the year. Looking ahead here in Canada, investors will likely be watching for potential federal funding announcements for innovative startups and growth companies in the government's first budget this fall," Ms. Cunningham notes.
Corporate venture capital investors deployed US$278 million across 17 investments, up significantly from US$17 million over 3 deals in the second half of last year.
Digital Assets and AI draw investors
Fintechs in the digital assets and artificial intelligence/machine learning space attracted the majority of investments, continuing a trend from last year.
"If we look at the first half of 2025, it's clear that digital assets have re-emerged as a magnet for investor interest, despite the broader contraction in venture investment values. Crypto's resurgence coming out of 2024 was reinforced by a more constructive regulatory tone in the U.S., the dismissal of the Coinbase lawsuit, and tangible mainstream adoption in stablecoin use cases. Tokenization is back in strategic roadmaps, and when you see marquee moves like Stripe's acquisition of Bridge and the ensuing partnership with Visa to launch asset-backed credit cards, it signals to investors that commercial models are maturing," Ms. Hitt says.
"Investor interest in digital will remain strong in the second half of the year and into 2026, driven by the U.S. administration's bullish view and lighter regulatory touch on cryptoassets. The focus will be on infrastructure, payments rails, and tokenization platforms that can scale in compliant, integrated ways," Ms. Hitt says.
Ms. Hitt expects AI-focused fintechs will also continue to drive significant investment for the foreseeable future, as more fintechs increasingly adopt and deploy agentic AI solutions across areas like personal finance, investment management, fraud detection and lending.
"AI-oriented fintechs will continue to draw considerable investment in the year ahead. The potential for agentic AI in the Canadian fintech landscape is going to be one of the most notable and exciting trends for investors to watch in the year ahead, with autonomous finance use cases — automated saving, budgeting, and investment — becoming increasingly viable."
About KPMG in Canada
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.
The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca
SOURCE KPMG LLP