Canada’s fintech start-ups are blazing the trail in the global fintech race!
In 2021 Canadian fintech investments unlocked a record high deal valuation with approximately CA $9.4 billion in investments! In 2022, despite the global ‘VC Winter,’ Canada attracted 169 fintech investments worth CA $1.75 billion.
Source: KPMG
It’s safe to say, this is just the beginning for fintech in Canada.
So, what makes Canada such a Hotspot for Fintech?
Canada already has over 1200 fintech companies. The country has all the makings of an environment that spurs and nurtures exciting, lucrative, global fintech companies. Let’s have a look at what these markers are:
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- Tech Epicenter: Canada is home to North America’s most rapidly expanding tech market – Toronto! Technology professionals already makeup 10.2% of its total workforce — that’s third-highest on the continent!
- Financial Titans: Canada hosts some of the globe’s biggest banks, insurance companies, and asset management firms. In fact, the World Economic Forum has often ranked the Canadian banking system as the world’s soundest.
- A market of early adopters: From ATMs to online banking, Canadians have consistently been at the forefront of adopting financial technologies, making it the perfect test market before global domination!
- Future proof talent pipeline: 55.2% of workers in Canada have completed post-secondary education, the highest proportion of all OECD member countries. The country also has a very strong number of STEM graduates entering the workforce every year.
- Government foresight: The Canadian government has been known for visionary strategies that set up the tech community for success. Canada was the first country in the world to introduce a national AI strategy – the Pan-Canadian Artificial Intelligence Strategy, and another noteworthy national strategy is the National Cyber Security Strategy that fosters innovative and supportive environments for fintech growth.
World-famous Canadian fintech exports
No matter where you live in the world, you are bound to recognize many fintech companies that were born in Canada!
Have you heard of any of these?
Wealthsimple: An automated investing platform
FreshBooks: An accounting software tailored for small and medium sized businesses
Mogo: It offers a range of financial services, from loans to Bitcoin trading
Dapper Labs: The company behind the viral blockchain-based game CryptoKitties
Payfirma: A multi-channel payment solution provider
Quandl: A platform for financial, economic, and alternative data
All of the above are proud Canadian fintech exports to the world! But this is just the tip of the iceberg. A PWC market map from 2019, shows off Canada’s phenomenal roster of VC backed fintech companies across sub sectors like accounting, lending, wealth management, crypto, insurance, and more.
Meet some of the fresh faces of Canadian fintech
With hundreds of new investments taking place every year, Canada is a birthing ground for a whole bunch of very promising fintech startups. Say hello to some of the rapidly growing fintech startups:
Neo Financial
Source: Techcrunch
Neo Financial, a Canadian digital bank is one of the fastest growing fintech companies in Canada. After just 3 years since its inception, Neo Financial achieved its millionth customer in 2022! As well, in 2022 Neo Financial earned unicorn status, securing a CA $185 million Series C round at a $1 billion+ valuation.
Bitfarm
Source: ctv
Founded in 2017, Bitfarms Canada is a cryptocurrency mining company. It provides computing power to cryptocurrency networks such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Dash. The startup topped the 2022 Toronto Stock Exchange (TSX) Venture 50 technology list – and has been recognized for its share price having gone up a whopping 506% in the last three years!
Koho
Source: jmpstrt
Established in 2014 in Toronto, this fintech platform provides a no-fee savings account, coupled with insurance and credit-enhancement solutions. In 2022, Koho raised CAD 210 million in a Series D funding round, one of Canada’s largest fintech funding rounds! The company has surpassed 500,000 users and is ready to turbocharge its growth by almost doubling its workforce.
Buckzy
Buckzy is a real-time cross-border payments company. Since going live in 2020, the company has added 140 customers including traditional banks, neobanks and fintechs. The Buckzy payment network currently disburses funds to over 80 countries! They recently raised CAD $19.5M in Series A funding which will help them focus on their expansion plans and give them enough runway to breakeven this year.
Brim
Brim is a certified credit card issuer offering both consumer and business cards with buy-now-pay-later features. They provide digital banking and a rewards system. In 2021, Brim raised CAD $25 million in Series B funding, just a month before it also partnered with Canadian Western Bank (CWB). Brim Financial also secured 8th place at the 2022 Deloitte Technology Fast 50™ awards program with a 2904% increase in revenue growth from 2018 to 2021.
Future of the Fintech Industry in Canada
While lending and payments continues to be at the center of fintech, with heavy hitters like TouchBistro and FundThrough leading the charge, other sub sectors are also rapidly gaining traction.
The proptech arena, for instance, is buzzing with innovation as it melds real estate with financial tech, reshaping property transactions. Names like Zoocasa and Rentmoola are transforming the realty marketplace.
Wealth management or wealthtech is also a complete magnet for fintech activity. Reports highlight wealthtech as a prime investment target, underscored by the fundraising achievements of Cacheflo and d1g1t.
Additionally, the growing interest in potential use cases for generative AI, particularly in cybersecurity, insurtech, and wealthtech, consistently draw interest.
The fintech’s mindset is also evolving when it comes to investments and funding. With substantial VC investments in 2021, many companies have extended their cash runway into 2023-2024. Moving away from a “growth at any cost” approach, fintechs are now prioritizing sustainable growth and longer cash conservation, aiming for near-future profitability.
Want to launch or expand a fintech startup in Canada?
We are BHive, a startup incubator located in Brampton, Ontario. We offer international startups the tools, resources, and space to establish – and quickly scale – their businesses in Canada and North America. To apply to our Global Entrepreneur Incubation Program, click here!
