Canadian Fintechs in H1 2025: AI and Digital Assets Lead a Strategic Shift in Investor Priorities

In the first half of 2025, Canadian fintechs raised $1.62 billion in funding—a figure that, while lower than the $7.5 billion frenzy of H2 2024, signals a recalibration of investor priorities. The sector is no longer chasing speculative hype but instead anchoring itself in fundamentals: scalable infrastructure, regulatory clarity, and technological maturation. This shift, driven by U.S. policy developments and the normalization of AI and digital assets, has created a compelling entry point for long-term capital.

The Post-2024 Normalization: Quality Over Quantity

The $1.62 billion raised in H1 2025 reflects a return to "normalized" investment levels after the extraordinary activity of 2024, which was inflated by two massive take-private deals. Investors are now prioritizing companies with strong unit economics, proven market traction, and defensible moats. This is evident in the surge of corporate venture capital (CVC) activity: $278 million was deployed across 17 deals in H1 2025, up from just $17 million in H2 2024. The focus is on late-stage, buyout-ready ventures—companies like Converge Technology Solutions, which secured a $916.5 million buyout by H.I.G. Capital, and Conquest Planning, a Winnipeg-based financial planning platform that raised $80 million in a Series B led by Goldman Sachs Alternatives.

This pivot to fundamentals is not a retreat but a refinement. As KPMG's Edith Hitt notes, investors are now "holding back and waiting for higher-quality opportunities," a strategy that rewards patience and due diligence. The result? A market where capital is directed toward ventures with clear paths to profitability, rather than speculative bets on unproven models.

AI and Digital Assets: The Twin Engines of Growth

Two sectors are driving this strategic realignment: artificial intelligence (AI) and digital assets.

Digital Assets: Regulatory Clarity Fuels Institutional Adoption

The U.S. regulatory environment has been a game-changer. The dismissal of the Coinbase lawsuit and the administration's lighter touch on cryptoassets have normalized the sector, attracting institutional capital. Canadian fintechs are capitalizing on this shift by building infrastructure that bridges traditional finance and digital assets. For example, Stripe's acquisition of Bridge and its partnership with Visa to launch asset-backed credit cards demonstrate how tokenization and stablecoins are becoming mainstream.

Investors are now prioritizing platforms that offer compliant, scalable solutions—think blockchain-based payment rails and tokenization platforms. The Ethereum (ETH) market, for instance, has stabilized at $4,802.46 per coin as of August 24, 2025, with a market cap of $579.69 billion. While volatility persists, the sector's institutionalization is undeniable.

AI: From Hype to Operational Reality

AI in fintech has moved beyond proof-of-concept. Agentic AI—systems capable of autonomous decision-making—is now embedded in personal finance tools, fraud detection algorithms, and lending platforms. The key differentiator is use-case viability: investors are backing companies that deliver tangible efficiency gains, such as automated budgeting, real-time risk assessment, and hyper-personalized financial advice.

Conquest Planning exemplifies this trend. Its AI-driven platform automates financial planning, reducing operational costs while expanding access to wealth management. The $80 million Series B round it secured in H1 2025 underscores investor confidence in AI's ability to democratize financial services.

Strategic Entry Points for Long-Term Capital

The normalization of the fintech market creates a unique opportunity for strategic, long-term capital. Here's why:

1. Regulatory Tailwinds: U.S. pro-crypto policies and Canada's potential federal funding announcements in Q4 2025 will further legitimize digital assets and AI-driven fintechs.
2. Technological Maturation: AI and blockchain are no longer "emerging" technologies—they are foundational. This reduces risk and increases scalability.
3. Valuation Discipline: With venture capital values down fourfold from H2 2024, entry points are more attractive. For example, Goldman Sachs Alternatives' investment in Conquest Planning highlights the appeal of mid-stage, high-margin ventures.

Conclusion: A Sector Poised for Resilience

Canadian fintechs are not just surviving the post-2024 normalization—they are thriving. By focusing on AI and digital assets, they are aligning with global trends that prioritize innovation, compliance, and operational efficiency. For investors, this means avoiding the noise of speculative hype and instead targeting ventures with strong fundamentals, regulatory alignment, and clear paths to market dominance.

The next 18 months will be critical. As U.S. regulatory frameworks solidify and AI applications mature, Canadian fintechs are well-positioned to lead the next wave of financial innovation. For those with a long-term horizon, the current environment offers a rare combination of risk mitigation and growth potential.

Investment Advice: Allocate capital to AI-driven fintechs with defensible moats and digital asset platforms with institutional-grade infrastructure. Avoid overhyped, pre-revenue ventures. The winners of this normalization will be those who build for the future, not the headlines.