Capital shifts to larger, later-stage bets as AI and digital assets gain ground
Investment in Canada’s fintech sector settled back to more typical levels in 2025 following an outsized surge in mega-deals the year before, according to KPMG International’s Pulse of Fintech H2’25 and FY25 report, based on PitchBook data.
Total fintech investment reached US$2.4 billion across 113 transactions in 2025, reflecting a slowdown from the exceptional highs recorded in 2024. While overall activity moderated, capital remained concentrated in sizeable transactions, signalling a more disciplined and selective investment environment.
Deal flow strengthened toward the end of the year. The third quarter saw US$327 million deployed over 26 deals, followed by US$662 million across 16 deals in the fourth quarter. Although the number of transactions declined, average deal sizes increased, underscoring investor preference for more mature, scalable businesses.
Among the year’s largest transactions were H.I.G. Capital’s US$898 million private equity acquisition of Converge Technology Solutions, Wealthsimple’s US$536 million equity financing led by Dragoneer Investment Group and GIC with participation from CPP Investments and existing shareholders, and Ripple’s US$200 million acquisition of Rail to enhance its stablecoin payments capabilities.
Dubie Cunningham, partner in KPMG Canada’s Banking and Capital Markets Practice, said the funding landscape reflects a maturing market focused on scale and long-term value.
“The investment appetite for Canadian fintechs will continue to grow in 2026, as investors prioritize quality, scale and strategic fit, signalling a market that is maturing and aligning more closely with long-term value creation,” she said.
Cunningham added that Canada’s challenger bank segment could see heightened activity in the coming year.
“Canada’s challenger bank market is poised for momentum in 2026 as newer entrants launch more competitive products, improve customer experiences and strike new partnerships. The roll out of Canada’s open banking framework – expected this year – will also serve as a catalyst for more investment in the sector,” she added.
Venture capital investment held steady year over year at US$1.2 billion, though concentrated in fewer deals. The fourth quarter marked the strongest period for VC investment since 2021, partly driven by Wealthsimple’s financing round.
Corporate venture capital participation also rose, with US$313 million invested across 25 deals as corporate backers pursued strategic opportunities and partnerships.
Globally, fintech funding rebounded to US$116 billion across 4,719 transactions in 2025, reversing a multi-year downturn and signalling renewed confidence in financial technology worldwide.
