Fintech VC Funding update

‍Volatility remains high, funding rounds remain below expectations

Alex Speedie

April 23, 2025

As the global mood darkens, venture capital is feeling the chill. Deal volumes have slipped steadily, quarter after quarter. Klarna, a Swedish payments giant once thought to be IPO-ready, has shelved its listing plans. Initially planned for the first quarter, now perhaps indefinitely. With the VIX, Wall Street’s fear gauge, still high, uncertainty remains rampant.

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Yet even in turbulent times, artificial intelligence continues to shine. In fintech, it is not merely improving business processes but upending them. Witness Rogo, a start-up from New York now worth $350m, which uses AI to churn out the quarterly earnings summaries that junior bankers once laboured over for hours. Firms that embed AI effectively are pulling ahead. Now the European Commission’s newly minted €191bn ($206bn) InvestEU scheme is designed to champion firms with global potential.

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Against this backdrop, KPMG’s latest Venture Pulse report captures the new reality:

In London and across Britain, both deal value and deal counts fell in the first quarter, relative to the end of 2024.
Deal activity has slumped to its lowest level since 2019. Bigger, rarer funding rounds, spaced three years apart, not 18 months are becoming the norm.
Investors now require evidence of profitability and scalability. Those with longer term horizons, such as in biotech, are finding it harder.
Fintech, with its faster path to monetisation, retains its allure.

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The medium-term outlook will depend largely on how long the market uncertainty persists for, where to measure that, the VIX (Volatility Index) is worth keeping a watchful eye on. The VIX measures the implied volatility of the S&P 500, America’s benchmark stock index. In essence, it offers a real-time glimpse of the market’s expectations for turbulence over the next 30 days. Investors use it to gauge risk. A surging VIX typically heralds caution. When the index subsides, confidence returns, investment decisions quicken. At the moment, the index is falling, but still remains at levels last seen in 2020.

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There is more cause for worry in currency markets. Since mid-January, the dollar has shed 9% against a basket of major currencies, hitting a three-year low. Investors are beginning to wonder whether America’s political and fiscal chaos might eventually spook markets for good. To be sure, the United States has proved remarkably resilient before, not least after the global financial crisis. Yet confidence, once shaken, tends to drain slowly, then all at once.

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Were capital to continue to move away from dollar assets, Britain could find itself an unlikely winner, provided it preserves its hard-won reputation for financial prudence. The London Stock Exchange and larger British firms could emerge as havens in a storm. Similarly, the ecosystem for fintech within London makes the city an attractive place for investment. The combination of the concentration of capital, leading technology firms already present, a local regulatory function along with the largest talent pool in the continent, is unique, which is why we believe Fintech will continue to flourish in the UK, come what may. As for when the investment market will pick up again? Better check the VIX!

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Fintech VC Funding update

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