Aug 22, 2024
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According to KPMG International’s H1’24 Pulse of Fintech report, a record USD$7.8 billion was invested in Canadian fintechs in the first six months of 2024, up more than seven-fold from last year's full-year total of USD$1.1 billion. Private equity investments into two Montréal-based fintechs – Nuvei Corp. and Plusgrade Inc. – accounted for as much as 94% of the total value invested in Canada, and were also among the biggest five deals globally.
"These two Canadian deals – among the biggest in the world – reflect the growing fintech ecosystem in Montréal and Quebec more broadly, where the startup scene is thriving thanks to support from institutional investors, and world-class universities are providing a steady stream of talent," said Georges Pigeon, a partner in KPMG in Canada's deal advisory practice in Montréal who specialises in financial services.
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Excluding those two deals, total investment was USD$516.8 million, down 26% from the USD$696 million invested in the second half of last year, and up nearly 20% from the USD$434.2 million invested in the first half of 2023.
Canada’s record first half
Nuvei's USD$6.3 billion deal was the largest in Canada, and the second largest, globally. A consortium, led by American private equity firm Advent International Corp., along with Novacap Management Inc., Caisse de dépôt et placement du Québec (CDPQ) and Nuvei chair and chief executive Philip Fayer acquired the Montréal-based payment technology firm in April.
In March, New York-based General Atlantic invested USD$1 billion into Montréal-based Plusgrade, a software provider to the travel industry – making it the second largest deal in Canada and the fifth largest, globally. The investment saw Novacap exit its stake in Plusgrade, with CDPQ remaining a significant shareholder.
"Over the past few weeks, we have already seen a number of significant investments and M&A activity take place in Canada, which suggests that the dealmaking environment could be on a path to normalisation soon,” said Pigeon, “Although it won't return to the record level of investment we saw in 2021."
Of the 65 investments in the first half, 46 were venture capital investments worth USD$264 million. The largest VC investment was Brim Financial's USD$62.8 million series C funding round in April. Corporate venture capital investments accounted for one quarter of all VC activity, with 12 deals worth $143 million.
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Breaking down the investments
The majority of funding flowed into the payments sector, with USD$6.4 billion invested across nine deals, driven largely by the Nuvei deal. Fintechs in artificial intelligence and machine learning also lured investors, with USD$31 million invested across eight deals.
The most active sector for investments was in the cryptoassets and blockchain space, with 19 deals in total – worth USD$110 million.
There were eight investments in AI and machine learning, which Pigeon predicts will only become a more prominent area of investment in the second half of the year and into next year.
Globally, USD$51.9 billion was invested in fintechs in the first half of 2024 across 2,255 deals, down 17% from the USD$62.3 billion invested in the last half of 2023 across 2,287 deals. This was the weakest six months of fintech investment since the first half of 2020.
While just over half of all investments are in the US, all regions experienced a noticeable drop in fintech investment – with Europe, the Middle East and Africa experiencing the sharpest drop — from USD$19.1 billion to USD$11.4 billion from the previous half year to now.
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Nicholas completed his master's in journalism and communications at Western University. Since then, he's worked as a reporter at the Financial Post, Healthing.ca, Sustainable Biz Canada and more. Aside from reporting, he also has experience in web production, social media management, photography and video production. His work can also be found in the Toronto Star, Yahoo Finance Canada, Electric Autonomy Canada and Exclaim among others.
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