Canadian fintech investment hits almost US$10 billion in 2024

Investment in Canadian fintechs remained strong in 2024, even as global investment declined, according to KPMG International’s ‘H2’24 Pulse of Fintech report’.

Data from PitchBook shows US$9.5bn was invested across 121 deals, a sharp increase from US$1.1bn across 129 deals in 2023.

One transaction accounted for two-thirds of last year’s total: the US$6.3bn take-private deal for Montreal-based Nuvei, which ranked as Canada’s largest and the second-largest fintech deal globally.

A US$1bn private equity investment in Montreal’s Plusgrade further contributed to the increase.

Excluding the Nuvei and Plusgrade deals, total investment in Canadian fintechs—including venture capital, private equity, and mergers and acquisitions—reached US$2.2bn in 2024.

This figure nearly doubled the amount from 2023 and exceeded the US$1.4bn recorded in 2022.

Despite the overall increase, deal volume fell in the second half of the year, with 45 deals in H2 compared to 76 in H1.

“Canada’s fintech sector is punching above its weight globally, with strong interest from venture capital and private equity investors—significant achievement in a year where global investment was weak,” says Dubie Cunningham, a partner in KPMG in Canada’s Banking and Capital Markets Practice who leads technology transformation.

Cunningham notes that five deals closed at US$140m or more in 2024, with four being private equity buyouts.

“It’s clear that private equity firms see established Canadian fintechs as keys to their growth strategies, and we believe this trend is likely to continue this year. With a strong pipeline of startups, growth-stage companies and near-exit-ready players, investment in Canadian fintech in 2025 looks promising,” she adds.

Venture capital firms increased their investment in Canadian fintechs, deploying US$1.09bn across 90 deals in 2024. This marked an increase from US$737.8m across 103 deals in 2023.

The latter half of the year saw a significant uptick, with US$744.9m invested across 33 deals, compared to US$340.5m across 57 deals in H1.

Among the largest venture capital-backed deals, Neo Financial raised US$260m in Series D funding, backed by several high-profile tech founders and entrepreneurs.

Blockstream secured US$210m in convertible note financing from Fulgur Ventures, while Koho attracted US$140m from investors including PROPELR Growth, Rockefeller Capital, Drive Capital, TTV, and BDC.

Corporate venture capital-backed investments reached US$24m across 19 deals, while mergers and acquisitions—including the Nuvei transaction—accounted for US$8.4bn across 27 deals.

Fintech investment activity is expected to grow in 2025, with an increase in go-private deals and fintechs acquiring traditional financial services providers, according to Georges Pigeon, a partner in KPMG in Canada’s Deal Advisory practice in Montreal.

“We’re seeing some publicly traded fintechs contemplating privatization because it’s easier to manage growth without the regulatory burden of public markets,” Pigeon says.

“Also, the lofty valuations of 2021 have come down, and that’s proving difficult for fintechs that went public around that time, so they might be looking at the private market again.”

Pigeon also notes an increase in fintechs acquiring incumbent financial institutions as they seek to replace or upgrade their technology infrastructure.

“We’re also seeing more transactions where fintechs are buying incumbent players because they see it as an easier way to replace their tech stack, or they see a path to replacing the tech stack. We expect to see continued activity in these types of transactions,” he adds.

_{Source: KPMG International’s ‘H2’24 Pulse of Fintech report’}

Cryptoasset and blockchain fintechs attracted the most investments for the third consecutive year, with 34 deals recorded in 2024. Artificial intelligence (AI) and machine learning (ML) followed, securing 19 deals, while the payments sector attracted 14 transactions.

Pigeon expects continued interest in AI and ML in 2025 but anticipates investors will be more selective about where they allocate capital. “Investors have capital to deploy in Canadian fintech, but fintechs will need to have a very strong value proposition to get funding,” he says.

“The fintechs that can demonstrate an ability to solve a problem for financial institutions and their legacy technology, that can acquire and retain clients, and that report decent profits will be more attractive to investors,” he adds.

Cunningham agrees that investors will take a more selective approach in 2025 and expects fintech valuations to rise. She also identifies regulatory technology (regtech) as an emerging sector to watch, given the increasingly complex regulatory landscape.

“Canada’s fintech ecosystem will see a market shift towards regulatory tech and ESG in 2025,” she says.

“Other sub-segments such as neo-banks and insurtechs that continue to expand their product offerings will see growth as well. Overall, the market is well-positioned for strength this year, with valuations likely trending upward.”