Funding for fintech firms in Canada continued to grow in the third quarter (Q3 2018), even as overall venture capital (VC) investment declined, according to a report published Thursday from PricewaterhouseCoopers LLP (PwC Canada) and CB Insights.
Both the number of deals and the value of venture funding fell in Q3 2018, the report says, with total VC investment dropping 42% from Q2 2018 to US$541 million. Tehe number of deals fell from 127 in Q2 2108 to 87 in Q3 2018.
“The first half of 2018 saw a new high in venture capital investment in Canada, and yet we have seen a marked decrease in deal activity in the third quarter. While a decrease does not come as a surprise, we will be sure to keep a close eye on investment trends for the following quarters as the tech sector in particular seeks to maintain funding levels,” says Michael Dingle, national deals technology leader at PwC Canada, in a statement.
Despite the overall decline in VC investing, the report points to the fintech and health sectors as bright spots. Funding for Canadian fintech companies jumped to $115 million in Q3 2018 from $79 million in Q2 2018. Five of the 12 fintechs that received funding in Q3 2018 are based in British Columbia, the report says, highlighting the region’s emergence as a strong source of fintech activity.
Investing in “digital health” firms came in at $83 million in Q3 2018, which was the third-straight quarterly increase, and represents a 170% jump from Q2 2018. Conversely, the artificial intelligence (AI) space, which enjoyed record investment in Q2 2018, saw its funding decline by 35% in Q3 2018.
The most active investors in Canadian companies during the Q3 2018 were BDC, Anges, Panache Ventures, Real Ventures and iNovia Capital, the report says.