2023-08-18 04:00:20
A report from KPMG in Canada says investment in Canadian fintech companies plunged in the first half of the year, causing valuations to fall to levels not seen since the start of the pandemic.
According to data compiled by PitchBook for KPMG in Canada, fintech investments in the country, including venture capital, private equity and M&A activity, totaled US$353.7 million in 57 deals. in the first six months of 2023. The result is down from a total of US$1.09 billion in 87 deals in the second half of 2022 and US$834.1 million in 109 deals in the first half of 2023. ‘last year.
The report states that the first half of 2023 was one of the weakest for valuations since the first half of 2020. This stems from the problems the global fintech market was subjected to during the first half of the year. . According to KPMG International’s latest semi-annual report, investments fell to US$52.4 billion spread over 2,153 deals, from US$63.2 billion spread over 2,885 deals in the second half of 2022.
Geoff Rush, partner and national financial services leader at KPMG in Canada, says the decline in investment continues a downward trend that began last year. “Investors remain very concerned about the state of the global economy, with fears of a recession, higher inflation and rising interest rates continuing to weigh heavily on valuations, leading them to pause and reflect on their current investments and strategies,” Rush said in a press release. “Geopolitical concerns and the failure of several banks in recent months are also influencing investor decisions. »
The report says that during the first quarter, investments in Canadian fintech totaled US$297.3 million across 30 deals. That sum is more than five times that of the second quarter, which, at US$56.5 million across 27 deals, is one of the weakest quarters for Canadian fintech valuations since the fall of 2016.
“While investment will continue to be weak in the second half of the year, we are likely to see pockets of activity in areas such as blockchain, artificial intelligence [IA] and machine learning,” said Rush. “There are a lot of financial services companies that are leaning heavily on technology and are looking to adopt more emerging technologies like generative AI, which should bode well for the fintech industry in the future. short and long term. »
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