KPMG data shows capital flowing to fewer, more established fintech ventures as deal volumes decline year over year
Canadian fintech companies attracted nearly US$1 billion in investment during the first half of 2026, as venture capital and private equity activity concentrated in scale-ready businesses rather than early-stage startups.
The H1'26 edition of KPMG's Pulse of Fintech report, recorded US$996.7 million deployed across 47 deals between January and June, a 40 per cent drop in total value from the US$1.7 billion raised across 82 deals during the same period last year.
Despite the decline in deal count, the per-deal average climbed sharply, pointing to a deliberate shift toward larger, more selective bets.
"Canadian fintech has entered a selective maturation phase, with investors going after fewer deals but applying more scrutiny to their investments," said Dubie Cunningham, a partner at KPMG Canada.
The deals driving the numbers
The period's standout transaction was a Series E round for Nesto, the Montreal-based digital mortgage platform, which raised US$218.6 million; a raise that pushed the company's valuation to US$1 billion. Investors in the round included La Caisse (formerly known as CDPQ) and Fidelity Investments Canada ULC.
The second-largest deal saw Toronto-based cryptocurrency firm WonderFi Technologies acquired by U.S. retail trading platform Robinhood for US$168.4 million, underscoring ongoing international appetite for Canadian digital asset businesses.
Quarter by quarter, investment picked up momentum as the year progressed. Q1'26 produced US$375 million across 24 deals, while Q2'26 yielded US$621.7 million from 23 transactions, a similar deal count but significantly higher average ticket size.
Where the money went
Artificial intelligence and machine learning dominated by deal volume, attracting 19 of the 47 transactions recorded during the half. Digital assets and cryptoassets followed with eight deals, while PropTech generated six and payments drew four. InsurTech rounded out the key verticals with two deals.
Venture capital accounted for the largest share of deployed capital, with US$492.9 million raised across 33 deals. Private equity and growth financing contributed US$130.6 million across two transactions — a figure that reflects the high per-deal value characteristic of late-stage activity. Corporate venture capital added US$25 million across eight deals, while merger and acquisition activity recorded US$37 million across 12 transactions.
Analysts and advisors tracking the Canadian fintech space may find it useful to compare these figures with broader venture capital trends — a separate analysis published on Wealth Professional last week found Canadian VC funding fell 12 per cent in the first half of 2026, with international investor participation hitting its lowest level since 2020. Fintech, however, appears to be holding up better than the broader VC market.
Regulatory factors in play
The KPMG report flagged two regulatory developments as potential catalysts for future fintech investment in Canada. The Consumer-Driven Banking Act — Canada's framework for open banking — and the planned rollout of Real-Time Rail, the country's new instant payment infrastructure, were both cited as structural changes that could reshape where capital flows in the second half of 2026 and beyond.
For Canadian wealth managers and financial advisors tracking the impact of AI tools on their practices, the AI deal count in this report is notable. Nineteen AI and machine learning deals in a single half suggests that institutional and venture money is moving in the same direction as the product roadmaps of the platforms advisors use daily. Advisor-specific AI tools have become a focal point of fintech development in Canada over recent months.
Global context
Globally, fintech raised US$103 billion across 2,098 deals in the first half of 2026, according to the same KPMG report.
The United States dominated activity, accounting for US$81 billion across 933 deals , the vast majority of global capital. Canada's share represents less than one per cent of global fintech investment by value, though the country continues to generate deal flow disproportionate to its market size, particularly in digital assets and AI-enabled financial services.
