Fintech — once one of Europe’s best-funded sectors — is lagging behind other sectors so far this year, as investors increasingly bet on companies in deeptech, healthtech and B2B SaaS.
According to Sifted data, fintech funding during the first half of 2025 fell 20% year-on-year in Europe, from €4.6bn in H1 2024 to €3.7bn in H1 2025.
In comparison, startups in the deeptech and B2B SaaS categories each raised €5.2bn, while healthtech companies received €5.7bn of investment.
The overall number of deals across the fintech sector also declined by just under 15%, with 275 deals in European fintech having closed so far this year, compared to 322 for the same period the year prior.
Fintech ranked second to last both in terms of equity funding and deal count, in further evidence the sector has lost bounce among VC investors. The only sector that closed fewer deals than fintech in H1 2025 was consumer, where a mere 264 deals were completed — that’s less than half of the 668 deals closed in B2B SaaS, European tech’s most active sector per deal count.
While the figures themselves don’t indicate a dramatic year-on-year collapse in investor interest, the sector continues to face an uphill battle, partially the result of the post-pandemic VC funding bubble popping in 2022.
The numbers also reflect a pervading sentiment among VCs that many of the leading players in fintech have reached a level of maturity that would make it challenging for a new entrant to break through, as Northzone partner Sanjot Malhi indicates.
“Several key subsectors such as banking already have powerful incumbents and more established disruptors, so VCs are now expecting earlier-stage fintechs to have stronger customer and growth figures than a few years ago,” he says.
UK neobanks such as Monzo, Revolut and Starling, for instance, have millions of users and have all reported consecutive years of profitability. The funding slowdown is particularly pronounced at early-stage where deal count has fallen by 20%. In contrast, mid-stage deal activity has increased by 14% over the same period.
Still, there are some bright spots. Even as fintech funding fell, median deal sizes increased from €3.1m in H1 2024 to €4.2m in H1 2025 — a 38% increase.
Adam French, a partner at seed investor Antler, says this is because, despite fewer deals in the space, investors are willing to spend more on qualified teams rather than “spreading their bets across anyone who claims to use AI.”
“Fintech infrastructure is complex and capital-intensive,” says French. “You need more than £3M to build a proper banking tech stack or payment rails. Investors are acknowledging this reality.”
The fintech subsectors of crypto and payments also ranked in the top ten best-funded subsectors overall so far this year, bolstered by large fundraises from the likes of Paris-based crypto market maker Flowdesk’s $102m round in March and payments provider Dojo’s $190m financing in May.
Funding for both of these subsectors also increased year-on-year by over 40% as regulatory clarity is fanning renewed excitement for payments and crypto startups among investors.
“Stablecoins (a cryptoasset pegged to the price of a stable currency such as the US dollar) as a technology, specifically, is fueling innovation globally in payments,” says Northzone’s Malhi. “Both actual usage and leading signals from the American administration — this week rubberstamping the sector with a new regulatory framework — could see investment ramp up globally, including in Europe.”
Read the orginal article: https://sifted.eu/articles/fintech-funding-h1-2025/
