Hey fintech friends,
There’s never a dull moment in fintech, and Q1 was no exception:
Deregulation is the flavor du jour in the US, where acting CFPB head Scott Bessent is attempting to fire the “vast majority” of employees, and in the UK, where the Payment Systems Regulator is being folded into the Financial Conduct Authority to cut red tape.
Rippling is suing Deel for alleged corporate espionage… at least, if they can serve Deel’s CEO, CFO, and legal director, who all appear to be in Dubai and out of reach from Rippling’s lawyers.
Fintech remains resilient despite the chaos, with early-stage funding even rebounding from the past two years’ lows and renewed hype around financial AI opportunities (more below).
For new readers, Signals is the premium subscriber edition of TWIF designed to get you away from the headlines and to explore the larger trendlines. Each quarter, we break down four key questions on fintech activity:
Which concepts are getting funded?
Where are exits, M&A, and SPACs concentrated?
Which firms are raising debt and venture funds for fintech?
Which products were launched over the last quarter?
If you haven’t already, subscribe to future editions here!
Overall activity
Fintechs raised a total of $8.79 billion in Q1, up 9% from the prior quarter and up 43% Year-over-Year. The number of rounds raised was up 13% QoQ (⬆️6% YoY), and on average, round sizes were consistent QoQ (⬆️33% YoY).
See the full Q1'25 data here (for paid subscribers only).
A cohort of fintechs reached unicorn status, with Plata’s $160M Series A bringing the Mexican digital bank’s valuation to $1.5 billion– and commercial contractor platform BuildOps’ $127M Series C, Indian fintech infrastructure platform Juspay’s $60M Series D, and crypto bank Sygnum’s $58M growth round all securing valuations of $1 billion.
See the full Q1'25 data here (for paid subscribers only).
Investment is migrating back to early growth-stage (Pre-seed - Series C) rounds after two solid years of concentration in Series B+, seemingly driven by investors conferring outsize multiples on early AI-native startups.
Which concepts are getting funded? 🤑
See the full Q1'25 data here (for paid subscribers only).
Areas that received the most funding were:
Crypto investment & lending, led by Binance’s$2 billion investment from Abu Dhabi’s MGX, Flowdesk’s $102M raise, and Bitwise’s $70M raise.
See the full Q1'25 data here (for paid subscribers only).
A few concepts received notable funding:
Agentic AI, with Quantexa’s $175M Series F, Auditoria.ai’s $38M Series B, Gable’s $20M Series A, Workhelix’s $15M Series A, Stacks’ $10M raise, Wiselayer’s $7M Seed, and Alta’s $7M Seed furthering financial providers’ ability to deploy and monitor AI within their ecosystems, Paid’s €10M Pre-seed bolstering AI builders’ ability to monetize their agents, and Crossmint’s $23.6M raise & Nevermined’s $4M Seed unlocking AI agent-to-AI agent payments.
Tax automation tools, with Numeral’s $18M Series A, Town.com’s $18M Seed, Qount’s $17M raise, Incentify’s $9.5M Series A, Integral’s €6.3M Pre-seed, Quanta’s $7M Seed, and TaxGPT’s $4.6M Seed automating taxes for business accounting teams. Fifteenth raised a $8.25M Seed to develop founder-centric tax solutions… just as the IRS reportedly plans to shutter Direct File, a free consumer tax filing program it piloted last year.
Where are exits, M&A, and SPACs concentrated? 📈
See the full Q1'25 data here (for paid subscribers only).
Areas that saw the highest M&A activity were:
B2C payments continues to internationalize, with Airwallex’sacquisition ofMexPago, Nayax’sacquisition ofUPPay, and Nigerian mobility fintech Moove’sacquisition of Brazil’s Kovi all marking payment companies’ expansions into LatAm. Airwallex also bought Vietnam’s CTIN Pay as part of its push into APAC.
Also, SmartBiz acquired United Community Bancshares to form SmartBiz Bank and received conditional approval to become a licensed fintech bank 👀.
Which firms are raising debt and venture funds for fintech? 💰
Aviva Investorsclosed a £150 million early-stage startup fund to support ventures in fintech, healthtech, climate, and other emerging sectors.
European fintech investor Incore Investraised a new €25M fintech investment fund.
London's VC Defiantlaunched a $30M fund to support B2B SaaS and fintech startups across Europe.
Ribbit is reportedly raising $500M for Ribbit Capital Y, downsizing 41% from its prior Ribbit X fund.
Which products were launched over the last quarter? 🚀
International remittances- Moniepointexpanded to UK, Thunesrolled out in Taiwan, Pomelopartnered with Mastercard & Coastal Community Bank to incorporate credit for users sending money to the Philippines.
Business financial management- Spend management platform Ramp launched Ramp Treasury, while business digital bank Mercury enabled same-day liquidity from Mercury Treasury and PipeacquiredGlean.ai to offer spend management alongside its core financing solution.
Stablecoin payments- BVNKlaunched an embedded wallet that unifies fiat and stablecoin payments globally; Bravaintroduced a stablecoin management system to facilitate stablecoin management for businesses, and Avalancheunveiled a new Visa crypto card enabling users to spend their stablecoin holdings in everyday transactions.
Q1'25 Roundup: AI agents that do stuff
So far this year, investors and fintechs have put a spotlight on early-stage AI applications– particularly, on agentic AIs now being used to manage business finances, detect fraud, research investments, and handle customer support. Whereas 2024 kicked off the hype around AI copilots augmenting human capabilities and automating repetitive tasks, it's clear that fintechs are gearing up for the next phase of AI innovation: Rules-based AI copilots are graduating into fully autonomous agents.
The AI agents that have been querying CRMs and tidying spreadsheets are now starting to do stuff; the biggest question for financial services providers in 2025 will be whether compliance and infrastructure can keep pace.
From AI copilots to agents: Why now?
A number of developments across the AI stack have been enabling companies beyond the largest financial services providers to develop their own agentic solutions:
Compute costs are declining as newer GPUs scale up processing capacity and vastly reduce $cost/token.
Live financial data unlock new use cases for AI automation. New payment standards coming into force in 2025, like Fedwire's and SWIFT's respective migrations to ISO 20022, can enable AI agents to screen transactions in real-time; open banking schemas like FDX open up a new array of datapoints for consumer fintechs to enrich insights on; cross-border trade frameworks like the EU's VAT in the Digital Age (ViDA) can give business-facing AI platforms better visibility on tax positions and potential fraud.
Fine-tuned financial models like ChatGPT and Claude give any company flexibility to augment their AI reasoning, but fintechs can now additionally leverage finance-specific models like FinGPT or BloombergGPT.
These new drivers are enabling AI applications that might not have been possible only a year ago– but there's still a long road ahead.
Outstanding gaps
Under the hood, most fintech stacks still aren’t ready for agentic autonomy. Legacy bank cores expose batch‑based APIs, and signals like ACH returns and card network alerts are typically stored in silos rather than in event stream platforms like Kafka, making it hard for agents to achieve the sub‑second round‑trips needed for fraud or treasury use cases. Vector databases housing unstructured financial docs often live outside bank firewalls, which could raise flags around data residency and latency. These infrastructural gaps will become especially constraining as new use cases and multi-modal AI systems emerge, introducing new complexity to agentic workflows.
From a regulatory perspective, it's unsurprising that the first wave of AI agents deployed in relatively low-risk use cases (like internal business financial management), but proactive regulation would further pave the path for AI developers to confidently deploy agents for more sensitive use cases, like consumer credit and insurance underwriting. To this end, the EU AI Act already establishes standards for transparency, fairness, and human oversight for AI development in Europe. The US (shocker) likely won't establish AI regulation at the federal level for the foreseeable future, but various financial regulators have highlighted concerns around data privacy, customer communication, and cybersecurity.
Until these infrastructural and regulatory gaps are closed, many fintechs will limit AI agents to low-risk, read-only use cases. Looking forward into 2025, a few key AI trends we'll be watching:
Greater autonomy for agents to undertake internal tasks like generating and submitting invoices, make operational and risk decisions with minimal human intervention, and execute customer support requests.
Multi-modal AI agents capable of interacting with various internal systems and external AI agents– for example, to settle invoices or negotiate insurance claims.
AI agent networks to support communication, inter-bank payments, and compliance oversight in transactions between counterparty AI agents.
More open-source financial AI models fine-tuned for niche use cases like trade finance, private credit portfolio monitoring, and insurance actuarial underwriting.
