Canadian Fintech Investment Takes Steep Dive in 2025’s First Half: KPMG Report
Investment in Canadian fintech companies dropped sharply in the first half of 2025, falling to US$1.62 billion across 60 deals, according to KPMG International’s “Pulse of Fintech H1’25” report. This marks a significant decline from the record US$7.5 billion invested in the second half of 2024 and is also below the US$2.4 billion recorded in the first half of 2024.
Despite the steep drop, KPMG experts emphasize that this decrease reflects a normalization of market activity. Last year’s unusually high figures were driven by two major take-private deals. Dubie Cunningham, a partner in KPMG Canada’s Banking and Capital Markets Practice, noted that while investment activity has dropped, it remains stable and robust compared to historical levels, especially considering ongoing economic challenges like tariffs affecting global trade.
Cunningham stated, “Investment activity has dropped to more stable levels… investment in the first half was quite robust compared to historical levels.”
Deal Highlights and Sector Trends
The largest Canadian fintech deal in the first half of 2025 was the $1.3 billion buyout of Converge Technology Solutions by H.I.G. Capital. The second largest deal was Fiserv’s US$201.5 million acquisition of Toronto-based Payfare Inc.
The funding landscape has shifted toward more selective investment, with investors favoring fintechs with strong fundamentals and profitability prospects. Private equity deals now make up a larger share of transactions, reflecting a preference for mature, quality companies.
Technology Focus
Despite the overall decline in investment volume, interest in digital assets (such as blockchain and cryptocurrencies) and artificial intelligence (AI) remained strong. KPMG predicts continued robust interest in AI-driven fintechs throughout 2025.
Growth areas include agentic AI—autonomous financial tools that handle automated saving, budgeting, and investing—which are expected to become increasingly viable for Canadian consumers and businesses. A favorable U.S. regulatory environment, particularly regarding stablecoins and digital asset normalization, is also providing momentum for Canadian fintechs in the digital asset space.
Investor Sentiment and Outlook
Investors are showing increased caution and selectivity, focusing on fintech companies with robust fundamentals rather than speculative ventures. However, significant available capital (“dry powder”) remains, meaning funding could rebound as macroeconomic uncertainty eases and high-quality opportunities emerge.
KPMG expects sustained momentum for Canadian fintech investment in the second half of 2025, driven by ongoing innovation in blockchain infrastructure and AI-driven financial products.
Global Context
The Canadian trend mirrors a global decline in fintech investments, which fell from US$54.2 billion via 2,376 deals in H2 2024 to US$44.7 billion via 2,216 deals in H1 2025. This global downturn is largely attributed to macroeconomic headwinds rather than country-specific issues.
In summary, while the first half of 2025 saw a major cooldown in Canadian fintech funding, investments remain robust relative to historical context, with digital asset and AI sectors leading activity. The outlook for the rest of 2025 is cautiously optimistic, driven by emerging AI technologies and continued growth in blockchain applications.
Deal Highlights and Sector Trends
The largest Canadian fintech deal in the first half of 2025 was the $1.3 billion buyout of Converge Technology Solutions by H.I.G. Capital. The second largest deal was Fiserv’s US$201.5 million acquisition of Toronto-based Payfare Inc.
The funding landscape has shifted toward more selective investment, with investors favoring fintechs with strong fundamentals and profitability prospects. Private equity deals now make up a larger share of transactions, reflecting a preference for mature, quality companies.
Technology Focus
Despite the overall decline in investment volume, interest in digital assets (such as blockchain and cryptocurrencies) and artificial intelligence (AI) remained strong. KPMG predicts continued robust interest in AI-driven fintechs throughout 2025.
Growth areas include agentic AI—autonomous financial tools that handle automated saving, budgeting, and investing—which are expected to become increasingly viable for Canadian consumers and businesses. A favorable U.S. regulatory environment, particularly regarding stablecoins and digital asset normalization, is also providing momentum for Canadian fintechs in the digital asset space.
Investor Sentiment and Outlook
Investors are showing increased caution and selectivity, focusing on fintech companies with robust fundamentals rather than speculative ventures. However, significant available capital (“dry powder”) remains, meaning funding could rebound as macroeconomic uncertainty eases and high-quality opportunities emerge.
KPMG expects sustained momentum for Canadian fintech investment in the second half of 2025, driven by ongoing innovation in blockchain infrastructure and AI-driven financial products.
Global Context
The Canadian trend mirrors a global decline in fintech investments, which fell from US$54.2 billion via 2,376 deals in H2 2024 to US$44.7 billion via 2,216 deals in H1 2025. This global downturn is largely attributed to macroeconomic headwinds rather than country-specific issues.
### Conclusion
The first half of 2025 has been a transformative period for the Canadian fintech sector, marked by significant deals and shifting investment trends. The $1.3 billion buyout of Converge Technology Solutions and Fiserv’s $201.5 million acquisition of Payfare Inc. highlight the robust activity in the sector. Investors are increasingly favoring mature, high-quality fintechs with strong fundamentals, reflecting a more selective approach.
Technological advancements, particularly in AI and digital assets, are driving innovation, with agentic AI emerging as a key growth area. Despite a global decline in fintech investments, Canada is poised for sustained momentum, supported by favorable regulatory environments and ongoing innovation. As macroeconomic conditions stabilize, the sector is expected to rebound, making it an exciting space to watch in the second half of 2025.
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