TORONTO — New research from KPMG shows investment in Canadian financial technology companies has dropped by more than 50 per cent in the first half of the year.
The auditing firm says fintech companies in the country garnered US$810 million in investments across 85 deals in the first half of 2022, down from US$1.9 billion in the second half of 2021.Â
The firm says the drop was also notable when compared to the same period in 2021, when US$5.4 billion in investment across 108 deals was seen.
However, it warned the first half of 2021 was an outlier because it was considered one of the strongest quarters for investment on record.
KPMG says most of Canada's fintech investment in the first half of the year came from venture capital with 25 being seed round investments, 23 being early-stage and 17 being later-stage funding rounds.
The drop in fintech investment comes amid a broader decline in the sector, which has prompted several startups and major technology firms to layoff workers and pare back spending.
"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 rebalancing of expectations, or a sector reset if you will," said Geoff Rush, national industry leader for financial services at KPMG's Canada business, in a release.
"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."
This report by The Canadian Press was first published Sept. 8, 2022.
The Canadian Press
