FinTech Investments in Canada recovered in Q2 2017 after a disappointing start to the year

Total FinTech Investment in Canada saw a 73% increase, from $44m in Q1 to $76.2m in Q2 2017

Total FinTech investments in Canada recovered in the second quarter of 2017 after funding declined by over 80% YoY in the first three months. However, the total investment in the sector remained 27.8% lower than the $105.6m raised by Canadian FinTech companies in Q2 2016, even though Q2 2017 saw more transactions. Both quarters this year remain significantly below the levels set in the Q1 2016 when $237.9m was invested across 25 deals. The biggest deal in the second quarter of the year went to Toronto-based robo-advisor Wealthsimple, which received $37m from Power Financial Corporation in May.

Despite progressively increasing between 2014 and 2016 FinTech funding in Canada looks set to fall this year

  • The total amount invested in Canadian FinTech companies grew at a CAGR of 25.6% between 2014-2016. The total number of deals also progressively increased during the same period.
  • The first half of this year has seen a notable slowdown in investments in Canadian FinTech Companies with only $120.2m invested across 20 deals. This amounts to only 21% of the total funding raised in 2016, suggesting that investments in 2017 will fail to set new record levels.
  • The largest deal in Canadian FinTech in 2016 went to Real Matters, which develops software for the mortgage lending and insurance industries with a focus on Real Estate. The company received $74m in a deal closed in March 2016.

Canadian companies that specialise in Payments & Remittances and Infrastructure & Enterprise Software received the highest number of deals since 2014

  • Payments & Remittances and Infrastructure & Enterprise Software companies received 47% of the total FinTech deals closed in Canada between 2014- Q2 2017. In this period $264.6m was invested in Payments & Remittances companies, whereas Infrastructure & Enterprise Software companies received the slightly higher total of $283.5m.
  • A further 18% deals went to Data & Analytics or WealthTech, with both subsectors receiving an equal deal share. Despite receiving lower deal shares the Real Estate and RegTech subsectors were some of the highest-ranking for total investment, receiving investments totalling $189.0m and $185.9m, respectively.
  • The largest deal to a Payments & Remittances company in the first half of 2017 went to Point of Sale developer Dream Payments, which received $10m in a series A round in March led by Fair Ventures.

The 10 most active FinTech investors in Canada participated in almost 25% of all deals since 2014

  • 24.9% of all investments in Canada between 2014 and Q2 2017 had at least one of the top ten investors as participant.
  • Canadian FinTech companies predominantly rely on domestic sources for investment; eight of the top ten most active Canadian FinTech investors are Canada-based. US-based duo Nexus Venture Partners and Blockchain Capital are the two exceptions.
  • BDC Venture Capital is the most active investor in Canadian FinTech and participated in 9.5% of all deals to FinTech companies in the country since 2014. The firm recently participated in a $23.8m Series D round to accounting software company Wave in May 2017.

Toronto-based FinTech companies attracted 45% of all deals in Canada since 2014

  • Nearly three-quarters of deals to Canadian FinTech companies since 2014 went to companies based in the top two cities – Toronto and Vancouver.
  • Third-placed Montréal received 13 deals with companies such as Blockstream and Lightspeed raising multiple rounds since 2014. Blockstream draws on Blockchain technology to restore trust in financial systems, while Lightspeed develops cloud-based point-of-sale solutions.
  • Between 2014 and Q2 2017 a total of $997.8m was invested in the top three Canadian cities for FinTech investments. Toronto, Vancouver and Montreal received $596.8m, $201.4m and $199.6m, respectively.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies in Canada as well as across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

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