Investors shift focus to profitable fintechs with strong fundamentals, KPMG report shows
After a record-setting year, investment in Canadian fintechs dropped sharply in early 2025, with US$1.62bn deployed across 60 deals, as reported by KPMG International’s Pulse of Fintech H1’25 bi-annual study.
The total fell from US$7.5bn in the second half of 2024 and US$2.4bn in the same period last year, according to data compiled by PitchBook for KPMG.
The largest Canadian deal in the first half was the $1.3bn buyout of Converge Technology Solutions by Miami-based H.I.G. Capital.
The second largest was Fiserv’s US$201.5m acquisition of Toronto’s Payfare Inc., as outlined in the KPMG report.
Dubie Cunningham, a partner in KPMG in Canada’s Banking and Capital Markets Practice, said the decline signals a return to stability rather than fading interest. She noted that last year was boosted by two major take-private deals, making it “exceptionally strong for fintech investment.”
She added that when factoring in economic shifts such as tariffs affecting global trade, first-half investment remained robust compared to historical levels.
Cunningham added that investors are becoming more selective, with plenty of capital still waiting to be deployed. “There’s still a lot of dry powder ready to be deployed by investors,” she said, noting that they are now focusing on quality companies.
She explained that mid-to-large stage private equity deals are also taking longer to mature compared to past years.
Global investment also cooled.
According to the same report, fintech funding worldwide fell to US$44.7bn across 2,216 deals in H1’25, compared to US$54.2bn across 2,376 deals in H2’24.
The Americas attracted US$26.7bn of that total, with US fintechs accounting for US$20.9bn.
Venture capital values also slipped.
KPMG data showed VC investors committed US$498.2m across 45 Canadian deals in H1’25, down from US$864.4m across 40 deals in the prior half.
The largest transaction was Conquest Planning’s US$80m Series B round led by Goldman Sachs Alternatives’ Growth Equity team.
Cunningham said the US trade war slowed activity but expressed optimism for the remainder of the year. “We expect activity to bounce back in the second half of the year,” she said.
She added that Canadian investors will likely be watching for federal funding announcements for startups and growth companies in the government’s upcoming fall budget.
Corporate venture capital activity, however, expanded significantly, reaching US$278m across 17 deals compared with US$17m across three transactions in late 2024, according to KPMG.
Edith Hitt, a partner in KPMG in Canada leading the Digital Financial Services Transformation team in Québec, said Canada accounted for 2.7 percent of global deal count and 3.7 percent of disclosed value.
She noted that “Canada is small but meaningful slice of global fintech – punching slightly above its weight on deal size and late-stage/buyout presence when big events occur.”
Hitt added that digital assets re-emerged as a key draw for investors in 2025.
She said crypto’s rebound was supported by “a more constructive regulatory tone in the US, the dismissal of the Coinbase lawsuit, and tangible mainstream adoption in stablecoin use cases.”
She pointed to Stripe’s acquisition of Bridge and partnership with Visa to launch asset-backed credit cards as signals that tokenization and digital assets are entering strategic roadmaps.
Investor appetite for AI-driven fintechs is also expected to continue.
Hitt said fintechs are increasingly using agentic AI in areas such as personal finance, investment management, fraud detection, and lending. “AI-oriented fintechs will continue to draw considerable investment in the year ahead,” he said.
He added that autonomous finance use cases — including automated saving, budgeting, and investment — are becoming more viable, making agentic AI one of the most notable trends for investors to watch.
