After a record-breaking year in 2021, investment in Canadian fintech dropped by more than 50% in the first six months of 2022, according to a KPMG report.
Canadian fintech companies saw US$810 million in total investment across 85 deals in the first half of 2022, down from US$1.9 billion in the second half of 2021.
The drop from the first half of 2021 was even more marked, although that period was an outlier, seeing a bumper US$5.4 billion in investment across 108 deals.
The majority of fintech investment in Canada in the first half of the year came from venture capital. Broken down by deal type, 25 were seed round investments, 23 were early-stage and 17 were later-stage funding rounds.
Despite a downturn in the crypto space, 29 of the 85 deals involved firms in this sector, with eight deals for payments companies and eight deals for regtech players.
Geoff Rush, national industry leader, financial services, KPMG in Canada, says: "The market downturn and ensuing lower tech valuations caused investors to hit the 'pause button' over the last few months, but with so much investment flowing into fintech last year, we see it as a re-balancing of expectations, or a sector reset if you will.
"We expect fintech to continue to draw interest in the second half of the year, but investors will be more selective about where they deploy capital."