Canadian Fintech Investment Plummets 75% in 2025 Following Record-Breaking Previous Year
Investment in Canada's financial technology sector experienced a dramatic slowdown in 2025, with total funding dropping nearly 75% from the record highs achieved in 2024, according to a comprehensive new report from KPMG International. The data reveals a significant shift in investor behavior toward more measured and disciplined approaches, even as certain subsectors continue to attract substantial attention.
Sharp Decline in Deal Volume and Value
The KPMG report, utilizing data from PitchBook, indicates that Canadian fintech investments totaled just US$2.4 billion across 113 deals in 2025. This represents a stark contrast to the US$9.9 billion invested across 161 deals during the previous record-setting year of 2024. The figures encompass venture capital, private equity, and mergers and acquisitions activity throughout the Canadian financial technology landscape.
Despite the substantial year-over-year decline in headline investment value, the report emphasizes that the 2025 investment environment demonstrated greater maturity and strategic focus. Investors showed sustained interest in later-stage companies, platform acquisitions, and specific fintech subsectors including artificial intelligence and digital assets.
Investors Prioritize Quality and Scale
Dubie Cunningham, a partner in KPMG Canada's banking and capital markets practice, explained that last year's investment patterns reveal investors are increasingly seeking mature and stable Canadian fintech companies with strong customer penetration and scalable platforms. This shift toward quality over quantity represents a fundamental change in investment strategy within the sector.
The investment distribution throughout 2025 showed distinct patterns: the first half of the year saw 71 transactions worth a total of US$1.4 billion, while the second half featured 42 deals totaling US$988.6 million. Activity in the latter part of the year was characterized by fewer but larger transactions, with primary focus on artificial intelligence and digital asset technologies.
Leading Investment Sectors and Major Deals
Artificial intelligence and machine learning technologies led investment activity throughout 2025, followed closely by digital assets—marking the fourth consecutive year these sectors have attracted the highest number of investments within Canadian fintech. Kareem Sadek, KPMG Canada's national technology risk services leader, noted that AI's capacity to unlock efficiencies and create new value through automation and advanced analytics is driving rapid acceleration of investor interest in AI-focused fintech companies.
"As financial institutions modernize their operating models, they're looking for scalable AI solutions that don't just streamline processes, but fundamentally reshape how decisions are made," Sadek explained.
The three largest Canadian fintech investments in 2025 included:
- A US$898 million private equity buyout of Converge Technology Solutions by H.I.G. Capital
- Wealthsimple's US$536 million equity raise, co-led by Dragoneer Investment Group and GIC with participation from CPP Investments and existing shareholders
- Ripple's US$200 million acquisition of stablecoin payment platform Rail
Global Context and Other Investment Areas
Globally, fintech investment reached US$116 billion across 4,719 deals in 2025, up from US$95.5 billion across 5,533 deals in 2024. The United States accounted for US$56.6 billion of that total, representing a significant increase from US$42.4 billion in the previous year.
Beyond AI and digital assets, several other fintech categories continued to attract steady investment throughout 2025:
- ESG and greentech-focused fintech companies
- Regulatory technology (regtech) firms
- Payment-focused fintech solutions
- Insurance technology (insurtech) companies
- Property technology (proptech) ventures
Meanwhile, investors remained more selective toward cybersecurity and wealth technology firms, reflecting a nuanced approach to different segments within the broader fintech ecosystem.
The report suggests that while 2025 represented a significant cooling period following the exceptional investment activity of 2024, the fundamental appetite for fintech innovation remains strong, particularly in sectors demonstrating clear strategic value and scalability potential.
