Investments in Canadian Fintechs Slow Down, Crypto and Blockchain Take the Lead
According to KPMG’s global Pulse of Fintech report, investments in Canadian fintechs saw a slowdown in 2023. However, crypto and blockchain-related investments dominated the scene. VC-backed investments accounted for over three-quarters of all deals, with 83 transactions valued at $711 million. The majority of these investments were early-stage or seed investments.
Crypto and Blockchain Lead the Pack
For the second year in a row, crypto and blockchain took the lead with a total of 31 deals. Software-as-a-service fintechs followed closely behind with 24 investments, while artificial intelligence and machine learning secured 15 investments.
US SEC Approval Boosts Interest in Cryptoasset Fintechs
The approval of spot bitcoin ETFs by the US SEC in January may have fueled investor interest in cryptoasset fintechs. KPMG advisory services partner Edith Hitt believes that this approval could help drive investment in Canadian fintechs and encourage technological advancements in the digital assets space.
Blockstream Funding Reflects Canada’s Growing Crypto Interest
Hitt highlighted Blockstream as a notable Canadian investment in a blockchain infrastructure company. Blockstream secured $125 million in funding to expand its bitcoin mining operations. This investment indicates increasing interest in blockchain technology and the potential for it to underpin a future central bank digital currency in Canada.
Global Trend for VC Funding in Crypto
KPMG suggests that various factors such as market cycles, slower growth, higher costs, and global tensions contributed to subdued investment activity in the crypto sector globally. Galaxy Digital reported a 70% decrease in VC funding for 2023 compared to the previous year.
Hot Take: Canada’s Crypto and Blockchain Investments on the Rise
Despite the overall slowdown in fintech investments, Canada’s market clearly favors crypto and blockchain. The strong presence of these sectors in the investment landscape reflects growing interest and potential for technological advancements. With the US SEC’s approval of bitcoin ETFs, it is likely that investment in Canadian fintechs will continue to rise, further bolstering the country’s position as a leader in the digital assets space.
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