Not surprisingly following the rush to invest in fintech companies which occurred in 2021, investment in Canada’s fintech sector dropped in 2022. Valuations declined more than five-fold and the number of deals slowed significantly towards the end of the year, according to new data from KPMG LLP. Despite this slowdown, however, the firm says 2022 is still the second-best year on record for deal volume.
In 2022 there were 169 fintech investment deals in Canada worth US$1.3-billion. This is down from 217 deals worth US$7-billion in 2021, according to data compiled by PitchBook for KPMG in Canada. The fourth quarter was reportedly the weakest, with just 27 deals worth US$154.8-million occurring in Canada, down from 41 deals worth US$285-million in the first quarter of 2022. It is also down from the 52 deals worth US$956-million reported during the fourth quarter of 2021. There were no fintech IPOs in Canada during all of 2022.
“It’s not surprising to see a decline given the market rout, and the fact that fintech investments hit such feverish heights in 2021,” says KPMG Canada financial services industry leader, Geoff Rush.
They add that the slump in Canadian and global markets put downward pressures on valuations – a trend which is expected to continue into 2023. The firm also says it expects valuations and deal volumes to remain subdued, with a slight pickup near the end of the year.
