The Nuvei and Plusgrade buyouts propelled investment in Canada’s FinTech sector to a record high in the first half of the year, according to a new KPMG report. Nuvei announced a whopping $6.3-billion USD exit from the public market in the second quarter, pushing overall investment in the sector to $7.8 billion USD. That surpasses the total deal value raised—$7 billion USD—during the entirety of 2021. Does that mean Canadian FinTech is back? Possibly. Let’s break it down.
The sector has struggled since the froth of the 2021 market settled. Deal volume fell 22 percent and total dollars invested fell 81 percent in 2022. Last year, deal volume plummeted 50 percent and investment dropped 30 percent.
This year has shown some traction: excluding the Nuvei and Plusgrade deals, investments in Canadian FinTech grew 20 percent compared to the first half of 2023. Brim Financial, a certified credit card issuer that sells technology infrastructure to other financial institutions, raised an $85-million CAD Series C. Online mortgage lender Nesto acquired CMLS Group, a 40-year-old mortgage services company and the third largest in Canada. Financial planning and accounting startup Vena attained centaur status. At the early stages: Shopify and Bench alums raised $11 million CAD in seed funding for Teal; Flinks and Versapay alums raised a $10.5-million Series A for Zūm Rails; Chexy, which aims to disrupt the rent payment space, raised $4.1 million CAD in seed financing.
A McKinsey report from earlier this year said Canada’s sluggish FinTech adoption pushes it behind other countries like Australia and the UK, but the high concentration of the financial services sector here makes it ripe for disruption. Banking revenues of $180 billion made up 7.9 percent of GDP last year, the highest of the top 10 developed economies that include the US, Australia, UK, and South Korea.
One of the issues standing in the way of the sector soaring is the glacial pace of Canada’s regulatory environment (looking at you, open banking) and infrastructure (and you, Real-Time Rails). Vault co-founder Saud Aziz talks more about both on The BetaKit Podcast this week (see below).
But it’s not stopping Canadian FinTechs from making moves: Koho continues its banking licence pursuit, and Josh Scott has the latest on Wealthsimple’s climbing valuation and assets under administration.
Thanks for reading on and ’til next week,
Bianca Bharti
Newsletter editor
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TOP STORIES OF THE WEEK
INNOVATEwest is on indefinite pause after Web Summit lands in Vancouver
The organizers behind INNOVATEwest, which held its inaugural event this past April in Vancouver, have put the new tech conference on indefinite pause due to Web Summit’s arrival in the city next year.
David Tyldesley and Mark Stephenson, co-founders of Cube Business Media, said in an exclusive interview with BetaKit that they launched INNOVATEwest because they felt there was an opportunity to create another tech-focused conference after BC Tech Summit stopped running once the pandemic hit.
“We build conferences and communities for them and when there’s government support, great, but it’s not something we rely on to produce our events,” Stephenson said. “But it became abundantly clear—hindsight being 20/20—that the City of Vancouver and the province had other plans in mind as it relates to Web Summit Vancouver.”
Power marks up value of stake in Wealthsimple for third consecutive quarter
Power revealed the latest hike in its Q2 2024 earnings report, noting that as of June 30, the firm considers the fair value of its collective stake in Wealthsimple to be $1.5 billion CAD, up from $1.3 billion following the first quarter and $1.1 billion at the end of 2023.
This represents a 36 percent rise over the first six months of 2024, and a nearly 67 percent jump year-over-year relative to the $0.9 billion that the financial services conglomerate reported its Wealthsimple holdings were worth as of the same time in 2023.
These three consecutive markups have helped Wealthsimple regain some of the value it has lost during the market downturn, but even today, Power still considers its stake in Wealthsimple less valuable than the $2.1 billion it was worth in May 2021.
Shopify’s venture into brick-and-mortar payments pays off, revenue grows 21% in Q2
Shopify’s revenue grew in its fiscal second quarter as the company navigated through a mixed consumer spending environment.
The Ottawa-based e-commerce giant reported Wednesday that sales increased 21 percent year-over-year to $2 billion USD for the three-month period ending June 30, 2024. Excluding the sale of its logistics business in 2023, revenue grew 25 percent.
Investors responded positively to Shopify’s earnings and forecast. It’s a reversal from investor sentiment in the first quarter, after the company posted a surprise loss, causing the stock to fall by 20 percent following the earnings release.
LeddarTech’s Nasdaq listing in jeopardy as stock falls below $1-USD minimum
In a statement issued Tuesday, LeddarTech said the Nasdaq’s notices advised the company it failed to meet certain Nasdaq listing requirements, including maintaining a minimum bid price of $1 USD, a minimum market value of publicly held shares of $15 million USD, and a minimum market value of listed securities of $50 million USD.
LeddarTech said it has been given 180 days to comply with these requirements to remain listed on the Nasdaq Global Market.
Ecosystem Spotlight: Montréal’s tech sector faces change with savoir-faire
Canada’s tech sector is navigating a period of significant change, and Montréal is no exception. This year has seen considerable shifts in the city’s tech landscape, including new legislation that could impact its ability to attract talent and major shifts within some of the region’s most cherished support organizations.
In many ways, Montréal epitomizes a Canadian tech sector in transition, with the sector meeting these changes head-on and continuing to carve out its value proposition in a rapidly changing market.
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Funding, Acquisitions, and Layoffs
VAN – Miru – $27.4M CAD
TOR – PureFacts sells majority stake, company valued at $250M
TOR – Nuvei to acquire Pay2All
TOR – Walnut – $4.6M CAD
TOR – Perspective Space – $3.9M CAD
MTL – Inscora – $2M CAD
The BetaKit Podcast
What Vault’s co-founder learned at Revolut
“If you want to succeed and build an enduring and large business for Canadians, that has to be your focus. Nothing else. If you want to focus on Canada as an additional market or a secondary market, it’s not going to work out.”
Three years after its bold expansion strategy, Revolut has a banking license in the UK, but not much to show in the US or Canada. The company’s former North American Head of Strategy & Operations, Saud Aziz, joins the podcast this week to discuss what went wrong and the lessons he’s taking forward with his new FinTech startup, Vault.
(Listen now on Apple, Spotify, YouTube)
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Feature image courtesy of Pixabay.
