The UK fintech market is booming, having witnessed $447million invested into the sector in Q1’25 alone, thus making it the second highest funding fintech ecosystem in the globe, only behind the US. Breaking down which areas of the market saw the most investment, Tracxn, the data intelligence company released its latest research.
Despite the UK ranking second for fintech funding, this was following a 65 per cent decline from the $1.3billion raised in Q1 2024 and a 59 per cent drop from the $1.1billion funds recorded in Q4 2024. March emerged as the most funded month of this quarter with $263million raised, accounting for 59 per cent of the funds raised in Q1 2025.
Different stages, different funding
Seed-stage rounds in Q1 2025 witnessed $43.5million in funding, a decline of 45 per cent compared to $79.4million raised during Q1 2024 and an eight per cent decline compared to $47.1million raised in Q4 2024. Early-stage funding in Q1 2025 totalled $125million , reflecting a sharp decline of 76 per cent from the $522million recorded in Q1 2024 and a 64 per cent drop from the $343million raised in Q4 2024.
The funding in late-stage rounds stands at $278million, witnessing a 60 per cent decline from $699million raised in Q1 2024 and $702million raised in Q4 2024.
Where was the investment going?
Payments, banking tech, and investment tech were the top-performing sectors in Q1 2025 in this space. The payments segment witnessed $244million funding, an 11 per cent decline in funding compared to the $274million observed in Q1 2024 and an increase of five per cent compared to $233million raised in Q4 2024, accounting for 55 per cent of the total funds raised in Q1 2025 in this ecosystem. A majority of the funds in this space is because of the $175million funding raised by Quantexa.
The banking tech segment witnessed $213million in funding in Q1 2025, a 72 per cent decline compared to $782million raised in Q1 2024 and a substantial increase of 308 per cent compared to $52.1million raised in Q4 2024. Nsave, provider of a multi-currency prepaid card payment solution to individuals, raised $18million in series A funding accounting for nine per cent of the funding in this space.
The Investment Tech segment has witnessed a total of $90million in Q1 2025 compared to $192million witnessed in Q4 2024, a decline of 53 per cent. This is also an increase of 9.6 per cent from $82.1million raised in Q1 2024. Fundment was the highest funded company in this space in Q1 2025 with a total of $54.4million.
Massive investment
This space witnessed only one over $100million funding round in this period, compared to two such rounds in Q4 2024 and Q1 2024. Quantexa, a decision intelligence company, raised $175million in its Series F round, making it one of the top five fintech fundings observed in Q1 2025 across the globe. No unicorns emerged in the UK fintech space in Q1 2025, similar to Q1 2024 and down from one unicorn in Q4 2024.
Only one company went public in Q1 2025 and Q1 2024 each, while no IPO was observed in Q4 2024. RedCloud, an online marketplace for supply chain financing, went public on 21 March 2025, making it the only IPO in Q1 2025.
Q1 2025 witnessed 27 acquisitions in this space, an increase of 23 per cent compared to 22 acquisitions in Q1 2024 and a 21 per cent decline compared to that of 34 acquisitions in Q4 2024. Two acquisitions with over $100million acquisition price were witnessed in Q1 2025.
Freetrade, an app-based stock market trading platform, was acquired by IG for $196million, and Helio was acquired by Moonpay at an acquisition price of $175million.
Location
London leads the space in terms of funding, accounting for 94 per cent of the total amount raised in Q1 2025, followed by Chelmsford and Manchester.
European Union, Seedcamp, and Techstars are the overall all-time top investors in this space to date. Y Combinator, Haatch, and Speedinvest were the top seed investors in Q1 2025. DN Capital, QED Investor, and Creandum were the top early-stage investors in Q1 2025.
The UK fintech ecosystem experienced a notable downturn in Q1 2025, with significant declines in funding across all investment stages despite retaining its position as the second most funded fintech hub globally. While payments, banking tech, and investment tech led sector activity, the absence of new unicorns and a reduced number of mega deals marked a subdued quarter. However, increased acquisition activity and consistent investor engagement reflect ongoing strategic interest in the UK fintech space.
