Which Canadian city has the best FinTech ecosystem?


Six months ago we published the second edition of FCP’s FinTech Map and received great feedback. We explored the strengths, weaknesses, and opportunities within Canada’s FinTech ecosystem by highlighting the number of startups gaining consumer traction across verticals.

Within the feedback, one follow-up question came up time and time again. “Ok, we understand how Canada is faring across verticals, but what about across cities?” Or, “Where in Canada should you build your FinTech startup to maximize its chances of success?”

Obviously, one can have success anywhere, and we have seen FinTechs flourish across the country. However, we hear a lot of high-level comments like, “Toronto has the best FinTech ecosystem in Canada” without there being much data to back up this claim. So we decided to crunch some numbers to test out if any of Canada’s major ecosystems have a significant advantage and, if so, to what degree. We analyzed over 400 FinTechs operating in Canada and the results are summarized in the two charts below.

Chart #1: The number of FinTechs by operating stage within each major Canadian ecosystem

In this analysis, we tested whether any particular city breeds a higher amount of startups in the pre-launch stage, early stage, or most importantly, the expansion stage (see below on how we defined each of these operating stages). We believe that the number of FinTechs in the expansion stage is a good indicator of success for each ecosystem. We circled in red the data that caught our attention.

Canadian FinTech ecosystem
Click to enlarge.
Canadian FinTech ecosystem
Click to enlarge.

A few takeaways:

  • It is not surprising that Toronto has the largest FinTech ecosystem in Canada with 185 startups, or 43% of all FinTechs. Montreal comes in second with 102 startups (24% of all FinTechs) and Vancouver in third with 65 startups (15% of all FinTechs).
  • Even though Toronto has almost double the number of startups than Montreal, they each have the same number of startups in the pre-launch phase. This can either imply that Montreal’s ecosystem is on the rise or that when Montreal companies get to a certain stage many of them end up moving their HQ to Toronto.
  • Impressively, Vancouver holds the largest proportion of startups in the expansion stage at 31%, which is 7 points above the national benchmark of 24%.

So, basically, if you want to launch your FinTech in the largest ecosystem in Canada, then Toronto is the winner. On the other hand, Vancouver may have a smaller community but is more effective in breeding high growth companies. Finally, Montreal seems to be a popular place to start your startup, even if you decide to move to another city in its later stages.

But what if you are running a crypto startup? Or a lending startup? Is there a better ecosystem for one than the other? Well, we have data for that, too!

Chart #2: How do HQ cities for Canadian FinTechs differ by vertical?

Canadian FinTech ecosystem
Click to enlarge.

A few takeaways:

  • Although Montreal is the second largest ecosystem for Fintechs in Canada, it has the largest ecosystem for Cryptocurrency & Blockchain startups (with 38% of Cryptocurrency & Blockchain companies based there).
  • Montreal also has a relatively strong ecosystem for Compliance startups with 39% of them based there.
  • Vancouver and Toronto are clearly the strongest ecosystems for lending startups (48% and 24%, respectively).
  • If you are building a Personal Finance application, the ecosystem in Toronto is almost 3x larger than anywhere else in Canada.

All in all, the data suggests that each ecosystem has its strengths, especially when dissecting them by vertical. What is most important is that local authorities recognize the relative strengths of each ecosystem and work together in ensuring that the next wave of financial services companies serving Canadians is homegrown.

There are many more conclusions you can draw from the data above and if you would you like to discuss any of them with us, we encourage you to reach out to jshaanan@ferstcapital.com. All feedback is welcome!

By Jonathan Shaanan and Chantal van Westen.


Jonathan Shaanan

Jonathan Shaanan is CFO and principal at Ferst Capital Partners, one of Canada’s leading FinTech-focused VCs.

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