According to reports, the key reasons for the downturn were geopolitical instability, high inflation, and rising interest rates. Considering such circumstances, investors are changing their approach: instead of chasing rapid growth, they are focusing on company profitability and sustainability. As a result, it has become extremely difficult to find not only funding but also for it to be good and stable investments aimed at a company’s long-term growth. 

This ongoing change forces fintech startups to face difficult questions of how to adapt to new conditions and where to find financing. Let’s try to reply to it in this article. 

What’s going on in the market? 

2025 is unlikely to be a record year for the number of transactions. Today, even effective companies are finding it harder to convince investors – they have become more demanding and prefer ones that demonstrate stability and clear financial results. Considering this, entrepreneurs will have to work hard to prove their business models' viability.

However, if we look on the bright side, entering the exchange market can become a new gateway for attracting funds and creating more opportunities for late financing rounds. After IPOs showed restrained activity, their number is expected to increase again – only in 2024, the number of IPOs in Europe rose by 80%. 

To attract capital in these less-favourable conditions, companies can focus on operational efficiency. For example, they may follow the "Rule of 40" principle, which balances revenue growth and profitability. However, even if the startup is a shining star of the industry, the problem of the IPOs is that they are mostly available for mature and well-established companies. 

The regulatory change 

For fintech startups, everything becomes even more complicated not only because of a lack of funding, but also in the face of tightening regulation. Although new regulations such as MiCA and AI Act, make the industry more transparent, they still require significant compliance resources. For smaller businesses, this can become a challenge, requiring balancing compliance efforts with development of their main products and scaling. 

The coexistence of multiple regulatory frameworks across the EU and UK presents an additional layer of complexity for fintechs. Harmonisation efforts, such as MiCA, are therefore a step in the right direction, offering clearer guidance for the entire sector.

Nevertheless, investors seem to adapt quickly to this situation: they focus their investments on regtech and automated solutions that can facilitate alignment with the new standards. Funding is primarily provided to those startups that implement AI compliance in advance and prepare for MiCA requirements faster than their competitors.

Such regulatory transitioning is also a driver for bigger market consolidation. Due to a lack of resources and knowledge, fintech companies are increasingly looking for partners. They often team up to clarify regulatory questions together, increasing the prospects for future M&A deals. 

Other potential solutions

However, startups’ founders should not lose courage – there are plenty of alternatives. I would say that it’s even a great lesson for them, since businesses should never rely only on one financing source and always have plans B, C, and, if needed, even K. 

Corporate investments

For example, startups can look closer at corporate investments. Banks and financial companies continue to invest in fintech, but they do so through strategic partnerships. Unlike conventional loans, this approach gives startups not only money, but also access to the customer base, technology and experience of major players, which significantly accelerates their growth.

Private equity

Private equity funds also continue to invest in fintech, but now they choose only reliable companies with proven profits and sustainable businesses. Unlike venture capital investors, who are willing to take risks for the sake of prospects, PE funds require specific figures: stable financial results, a clear development plan and real profits. If a company wants to attract such investments, it is important for it to prove that it operates transparently, stably and is able to grow without surprises.

Revenue-based financing

As for revenue-based financing, it provides an opportunity to receive money without losing business share – a great option for companies that are already earning and can confirm their monetisation. At the same time, payments depend on the company's income: if the business grows, investors receive more, and if revenue falls, the entrepreneur is not in danger of a tight repayment schedule.

Final thoughts 

So, given the challenging state of the fintech industry, it seems that no one will bring fintech startups funds on a silver platter. Access to capital now requires more strategic planning and proven performance – reflecting a more disciplined and resilient investment environment.

Therefore, financing in 2025 is not just about finding investors, but about forming sustainable and long-term partnerships. Companies capable of integrating new forms of capital will take a strong position in the market and ensure their long-term development despite all the difficulties.

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