Fintech investment in Canada reached US$7.8 billion in the second half of this year compared to US$1.1 billion for the whole of last year, reaching a new record for a six-month period, according to a report from KPMG.
There were only five fintech deals worth at least US$1 billion during the first half of 2024, and two of them came from Montreal: Advent International’s US$6.3-billion acquisition of payments firm Nuvei and General Atlantic’s US$1-billion buyout of revenue solutions firm Plusgrade.
“These two Canadian deals — among the biggest in the world — reflect the growing fintech ecosystem in Montreal and Quebec more broadly, where the startup scene is thriving,” Georges Pigeon, a partner with KPMG in Canada’s deal advisory practice in Montreal who specializes in financial services, said in a release.
After two years of relatively weak fintech investment in Canada, activity could bounce back in the next six months, Pigeon said, but it won’t return to the record investment level in 2021.
Despite Canadian fintech investment reaching record highs, total global investment declined to $51.9 billion in the first half of 2024 from US$62.3 billion in the second half of 2023, the lowest six months since the first half of 2020.
Total fintech investment in the Americas also fell to US$36.7 billion in the first half of this year from US$38.5 billion in the second half of last year. The appetite for large deals in this hemisphere was dampened by high interest rates, geopolitical uncertainty and lingering difficulties in valuation, KPMG said.
Fintechs agree to referral partnership
London, Ont.-based automated data discovery firm interVal and Massachusetts-based wealth management platform developer FusionIQ became referral partners in August.
The interVal platform analyzes a business’s metrics, such as its valuation, and informs the owner’s financial advisors of opportunities, said Trevor Greenway, co-founder and CEO of interVal. For example, if interVal detects excess working capital along with an upward trend in revenue, the platform could alert the advisor. The advisor could in turn suggest investing that capital or using it to purchase insurance to fund a shareholders agreement.
The referral partnership made sense as the two software-as-a-service platforms are complementary, said Howard Atkinson, head of business development with FusionIQ Canada in Toronto. “If you find a wealth manager that adopts one technology, they’re much more likely to adopt a second technology,” he said.
While the current partnership is for mutual referrals, interVal could be integrated into FusionIQ’s platform in the future, Atkinson said. “We can pretty much just display anything. If the other party has an API connection, we can do it.”
There’s “strong alignment” in the way that interVal and FusionIQ look at wealth management, and the two platforms could “play nicely together” if interVal became a tool on the FusionIQ platform, Greenway said. “It wouldn’t be crazy to see that as a future opportunity.”
FusionIQ entered the Canadian market last year and signed a referral partnership with North Star Consultants, a wealth management compliance advisory firm, last November.