YEREVAN (CoinChapter.com) — Despite the overall slowdown in fintech investment, the crypto and blockchain sectors in Canada stood out for attracting a considerable share of funds. Venture capital-backed investments dominated the scene, accounting for over three-quarters of all deals, with 83 VC-backed transactions totaling $711 million.
Slow Fintech Did Not Sway Canadian Crypto Investment
A significant portion of these investments were in early-stage or seed funding rounds. Meanwhile, a 2023 report from KPMG (one of the largest and most respected global networks of professional services firms) indicates a significant downturn in investment across the Canadian fintech sector.
According to the research, total funding decreased to $920 million across 109 deals, down from $1.29 billion across 208 deals in the previous year. This marks a continuation of the decline from a record high of $7.15 billion in 2021. The report attributes this reduction to a global decrease in fintech investments, with a notable drop in deal volume and value globally.
However, one of the report’s key findings is the noted dominance of crypto and blockchain investments for the second consecutive year, leading all other fintech verticals in Canada with a total of 31 deals.
This trend reflects sustained investor interest in digital assets, partly driven by the anticipation and subsequent approval of Bitcoin ETFs in the US, which has been seen as a milestone for broader industry acceptance.
CBDC Will Pave The Way?
The report also highlights several significant investments in the sector, including a substantial funding round for a blockchain infrastructure company. This interest could translate into potential support for a future central bank digital currency (CBDC) in Canada, indicating long-term growth prospects for the fintech ecosystem.
Moreover, the report discussed the broader context of fintech investment, noting that venture capital-backed investments accounted for a significant portion of the activity, with a strong focus on early-stage and seed investments.
The resilience of certain fintech sub-sectors, such as software as a service (SaaS), artificial intelligence (AI), and machine learning, also didn’t go amiss. These areas received considerable investment despite the overall downturn.
The report suggests that the rest of 2024 may remain challenging for fintech investments, particularly affecting companies needing immediate funding. However, it also points to potential positive developments, such as expected interest rate cuts by the Bank of Canada and the introduction of open banking legislation, which could stimulate the fintech investment landscape in the country.
