Canadian financial technology companies backed by venture capitalists reached a level not seen in nearly two decades, despite a slowdown of investment dollars flowing into FinTechs in the U.S.
According to a report by Reuters, while FinTechs may not be red hot in the U.S., in Canada, they are breathing new life into the startup market and have drawn in a new crop of venture capital funds in Canada that are looking for young FinTech companies. Citing data from PitchBook, Reuters reported venture capital financing of Canadian FinTechs was $137.7 million in 2016. That’s up around 35 percent from the year earlier. Rewind five years, and the investment dollars hovered around $21 million. In 2000, it was $7.3 million, according to the report.
Thomson Reuters data showed a close to 74 percent increase from 2015 to 2016 in terms of investments in Canadian FinTech startups. While the investment dollars are tiny compared to the $4.27 billion invested in the U.S. during 2016, investments are increasing in Canada at a time they are declining both in the U.S. and the U.K. Reuters reported investments in FinTech in the U.S. dropped by 30 percent or more in 2016. In the U.K., it fell 25 percent, and investments in FinTech companies in Singapore fell 65 percent. The weak activity in the U.S. and U.K. was driven by Brexit and the U.S. presidential election, noted the report.
“From a global stage, Canada is a relatively small market,” said Adam Nanjee, who heads the FinTech group in Toronto’s MaRS research hub, in the report. “But it’s one of the best markets to build a company around innovation because we have a great test market, great infrastructure for financial services.”
Reuters noted that the province of Ontario is home to the most tech firms outside Silicon Valley.
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