Global market turbulence may keep fintech fundraising under pressure

Fintechs raised $889 million in H1 2025, down 26 per cent from H2 2024 and 33 per cent from H1 2024, as valuations cool, regulations tighten, and investors adopt a wait-and-watch approach

Fund-raising by fintechs may not be buoyant anytime soon, and turbulence in the global financial markets in the aftermath of tariff woes has the potential to play spoilsport.

 

According to data from data intelligence platform Tracxn, fintechs raised $889 million in H1 2025, a 26 per cent fall from $1.2 billion in H2 2024 (and a five per cent drop from $936 million in H1 2024).

 

Funding trends across stages in H1 2025 reflected a nuanced landscape for fintechs. Seed-stage fintechs raised $91.2 million, a decline of 27 per cent from $126 million in H2 2024 (and 33 per cent from $137 million in H1 2024). In contrast, early-stage funding saw a resurgence, with $361 million raised — a 10 per cent increase over $329 million in H2 2024 (and a 9 per cent rise from $333 million in H1 2024) — highlighting renewed confidence in startups with initial traction. However, late-stage funding dropped to $437 million, a 41 per cent decline from $745 million in H2 2024 (and 6 per cent from $467 million in H1 2024). 

 

“Valuations had peaked around 2022, and we have seen a correction after that. While investors are convinced of the scale fintechs can achieve, and their ability to cater to a large number of customers concurrently, they are now focusing on how this scale will be monetised into sustainable revenue models,” said Rohan Lakhaiyar, partner (financial services-risk), Grant Thornton Bharat. Another factor is that the regulatory landscape is evolving and business models have to be tweaked. “Consequently, investors are evaluating how things will play out in the medium to long term, and hence, the wait-and-watch approach,” he added.

 

The RBI’s Report on Trend and Progress of Banking in India (2024) observed that it had convened structured and open interactions with fintechs at periodic intervals with a view to convey policy initiatives, understand new developments, products, services and use cases, and gather market intelligence. It noted that the financial sector landscape is witnessing paradigm shifts with the advent of emerging technologies like artificial intelligence and machine learning, tokenisation and cloud computing. “While the benefits of their adoption are many, the attendant risks like algorithmic bias, explainability of decisions and data privacy are also high,” it stated.

 

Earlier, Mint Road’s Working Group report Digital Lending through Online Platforms and Mobile Apps (November 18, 2021) said a blurring of lines between regulated and unregulated financial institutions and activities “spurred by mere commercial considerations” would pose regulatory challenges in ensuring monetary and financial stability and in protecting the interests of customers. 

 

A report by Coatue (run by hedge fund and portfolio manager Philippe Laffont) — Fintech and the Pursuit of Prize: Who Stands to Win Over the Decade (October 2022) — was categorical that “the next generation of enduring fintech requires a focus on owning the balance sheet, maniacal re-bundling, a business-to-business leaning, and building high-margin sub-verticals.”