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Home»Banking»Fintech investment holds steady amid trade war
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Fintech investment holds steady amid trade war

August 5, 2025No Comments3 Mins Read
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Fintech investment holds steady amid trade war
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Economic uncertainty hasn’t put a dent in investor appetite for fintech, which has held up so far in 2025.

Equity deals in the global fintech sector surpassed $10 billion in Q1 and Q2 of this year, which hasn’t happened since early 2023 according to CB Insights’ State of Fintech Q2 2025 Report. 

“CB Insights is right to flag two strong quarters with over $10 billion in fintech funding as an encouraging signal,” Hadar Siterman Norris, a partner at global venture group Team8, told American Banker. “While not yet a full recovery, there’s certainly growing optimism, driven by rising investor confidence.”

The report also noted an increase in merger and acquisition deals from the previous quarter and a rise in fintech initial public offerings, especially through digital asset companies, such as Circle’s IPO and Coinbase’s $2.9 billion acquisition of crypto derivatives exchange Deribit.

“Larger deal sizes, steady M&A growth, and more backing for strong companies signal a sector gradually maturing and consolidating,” Siterman Norris said.

chart visualization

While investing showed an uptick this quarter, it’s still comparatively low from two years ago. 

“We need the other side of these transactions to happen so that the investing machine works, whether it’s venture or private equity,” Chris Sugden, fintech investor at Edison Partners, told American Banker. “I would say we’re actually lighter on exits, even though we’re starting to see a little bit of promise.”

The fintech sector wasn’t as notably affected by market uncertainty surrounding the Trump administration’s various tariff announcements as some had feared, according to Siterman Norris.

See also  The Consumer Financial Protection Bureau has proposed reducing supervision of nonbanks in four key markets: auto financing, consumer credit reporting, debt collection and international money transfers.

“Tariffs have had little impact so far,” she said. “Most fintech activity is in software, which is largely insulated.”

However, funding in the sector still remains below early 2022 levels, when fintech equity investment reached its peak before the 2022-2023 drop and the shutdown of Silicon Valley Bank.

“The fintech sector got beaten up well before even the tariff news hit, so it was already in a recovery of sorts,” Sugden said. 

He went on to say that the second half of the year would reveal whether the two-quarter rally is just a “seasonal blip” or if it is the beginnings of a longer-term trend toward full recovery for the sector.

Sugden also noted that the Trump administration has created a “tailwind” for the fintech sector with recent regulatory shifts.

“The administration has been a tailwind for fintechs,” he said. “The Genius Act has positively impacted crypto, and the overall regulatory environment appears more favorable to getting deals done and innovation in general.”

Innovation in compliance-based AI is also continuing to drive fintech investment, according to Piyush Puri, managing partner at Mercurius Media Capital, a media-for-equity fund with a fintech portfolio.

“AI guidance is pushing teams to formalize model risk management, which actually helps buyers green light budgets,” Puri told American Banker. “That is a tailwind for AI native risk, underwriting, collections, and data quality platforms that come with governance built in. … If rules stay ambiguous, funding will still flow, but it will skew toward compliance infrastructure that helps firms be ‘compliant by default.’ In short, more clarity means faster committee approvals and larger checks in those subsectors through year-end.”

See also  Trump tariff pause gives banks a reprieve, but threats remain

CB Insights covers over 23,000 fintech companies worldwide. The data analytics firm defines a “fintech” as a company or startup that “provide[s] technology to streamline, improve and transform financial services, products and operations for individuals and businesses,” according to a company representative.

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