Welcome to our FinTech 2021 newsletter. FinTech in Canada has seen a record start to the year, coming out strong from the pandemic with the momentum we can predict to see continue into the latter half of 2021. At Fasken, we have been keeping our fingers on the pulse of FinTech in Canada and keeping atop trends such as Open Banking, payments modernization, blockchain, InsurTech and more. Our cross-country FinTech team has expertise in financial services, emerging technology and information technology to assist clients with all FinTech matters that arise. Below, we outline some of the topics we have unearthed in 2021 and some key items to watch for in the future.
FinTech Sees Record Funding in 2021
The first half of 2021 in FinTech saw record funding with a total of 61 VC-backed deals over 58 companies for a total of $2.71Bn in total disclosed funding. This includes all rounds of VC-based financing, angel investments and accelerator and incubator investment across FinTech in Canada. When compared to 2020, we only saw $113.58M invested across 46 Canadian FinTechs, so it's clear to see that FinTech is on the rise in the Canadian market. While many have said that the pandemic attributed to some of the decreases in investment in 2020 and the subsequent increase in 2021, we believe that the FinTech ecosystem is on the rise and we will continue to see this trend into the second half of 2021.
January 2021 to date also saw some large financing deals in Canada and the formation of four new FinTech unicorns (or Narwhals, if you will). These new unicorn status companies include Wealthsimple, with their recent Series D; Trulioo, who raised a Series D; Dapper Labs, who raised a sizable round; and Clearco (formerly Clearbank) with their Series C investment. These late-stage mega deals are fuelling the future of the FinTech industry in Canada as we watch how these companies are achieving a global status while maintaining their strong Canadian roots.
Later-stage FinTechs weren't the only companies raising capital in 2021, there was also an influx of early-stage deals (Angel to Seed) with a total of 37 deals occurring during this period for a total amount raised of $123.75M. It's clear to see that it is a 'founders market' right now in the FinTech sector where there is plenty of capital to go around and founders are raising at an unprecedented rate. Many believe that this growth on the early-stage financing side is partially due to the pandemic. Those teams that decided not to raise during the beginnings of the pandemic delayed their larger financing rounds finding instead other capital to lean on such as debt or cutting unnecessary costs such as office spaces. Now that the world is slowly beginning to re-open, many of these teams have decided to go out to market and have seen successful raises. On the flip side, we are also seeing more early-stage financings as those who had the entrepreneurial bug before the pandemic leveraged a potential layoff to start bringing their vision to life.
Going into the second half of 2021, we can predict that the FinTech sector will remain frothy and we will continue to see this same pace of financings into late 2021. As we continue to monitor these trends, subscribe to our FinTech Bulletin to keep on top of all upcoming news and resources related to FinTech at Fasken.
FinTech Events at Fasken
Fasken recently engaged with thought leaders to host two FinTech-specific events. The first was a panel on Open Banking in Canada. Engaging with Sen. Colin Deacon (Senate of Canada), Ben Harrison (Portag3) and Peggy Van de Plassche (Roar Growth), we led a discussion on how we can make Open Banking in Canada a reality and what the path to success might be.
Our second FinTech event was around the important topic of diversity and inclusion in the FinTech sector. Joined by Hanna Zaidi (Wealthsimple) and Laviva Mazhar (Luge Capital), we hosted an intimate fireside chat discussing career progression, breaking into the FinTech industry and 'stories from the trenches,' from each of these remarkable women.
Regulatory Update
On June 1, 2021, amendments to the regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act came into effect (the "Amended AML Regulations"). The Amended AML Regulations now include rules and definitions concerning virtual currency, prepaid payment products and accounts and others related subjects.
For more information, see Fasken's bulletin issued at the time these amendments were first published. Since then, several amendments have undergone changes. Stay tuned as we will address those in an upcoming bulletin.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
