Tracxn has released its Q1 2025 UK FinTech Funding Report, capturing the funding dynamics in the country's financial technology space. The UK FinTech ecosystem emerged as the second highest funded FinTeUwinch ecosystem globally after the US in Q1 2025. Despite this ranking, the sector experienced a significant contraction in overall funding compared to previous quarters and the same period last year.
The UK FinTech space witnessed a total of $447M in Q1 2025, reflecting a 65% decline from the $1.3B raised in Q1 2024 and a 59% drop from the $1.1B funds recorded in Q4 2024. March emerged as the most funded month of this quarter with $263M raised, accounting for 59% of the funds raised in Q1 2025.
Seed-stage rounds in Q1 2025 witnessed $43.5M in funding, a decline of 45% compared to $79.4M raised during Q1 2024 and an 8% decline compared to $47.1M raised in Q4 2024. Early-stage funding in Q1 2025 totalled $125M, reflecting a sharp decline of 76% from the $522M recorded in Q1 2024 and a 64% drop from the $343M raised in Q4 2024. The funding in late-stage rounds stands at $278M, witnessing a 60% decline from $699M raised in Q1 2024 and $702M raised in Q4 2024.
Payments, Banking Tech, and Investment Tech were the top-performing sectors in Q1 2025 in this space. The Payments segment witnessed $244M funding, an 11% decline in funding compared to the $274M observed in Q1 2024 and an increase of 5% compared to $233M raised in Q4 2024, accounting for 55% of the total funds raised in Q1 2025 in this ecosystem. A majority of the funds in this space is because of the $175M funding raised by Quantexa.
The Banking Tech segment witnessed $213M in funding in Q1 2025, a 72% decline compared to $782M raised in Q1 2024 and a substantial increase of 308% compared to $52.1M raised in Q4 2024. Nsave, provider of a multi-currency prepaid card payment solution to individuals, raised $18M in Series A funding accounting for 9% of the funding in this space. The Investment Tech segment has witnessed a total of $90M in Q1 2025 compared to $192M witnessed in Q4 2024, a decline of 53%. This is also an increase of 9.6% from $82.1M raised in Q1 2024. Fundment was the highest funded company in this space in Q1 2025 with a total of $54.4M.
This space witnessed only one $100M+ funding round in this period, compared to 2 such rounds in Q4 2024 and Q1 2024. Quantexa, a decision intelligence company, raised $175M in its Series F round, making it one of the top 5 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 21st March 2025, making it the only IPO in Q1 2025.
Q1 2025 witnessed 27 acquisitions in this space, an increase of 23% compared to 22 acquisitions in Q1 2024 and a 21% decline compared to that of 34 acquisitions in Q4 2024. Two acquisitions with $100M+ acquisition price were witnessed in Q1 2025. Freetrade, an app-based stock market trading platform, was acquired by IG for $196M, and Helio was acquired by Moonpay at an acquisition price of $175M.
London leads the space in terms of funding, accounting for 94% 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.
