Market data tracker Tracxn has released its Q1 2025 UK FinTech Funding Report, capturing the funding dynamics in the country’s fintech space, with the UK retaining second spot globally and Manchester performing strongly, despite a sizeable overall fall in funding nationwide.
Probably unsurprisingly, London leads the space in terms of funding, accounting for a massive 94% of the total amount raised in Q1 2025. In terms of the remaining six percent, however, there was some good news for the North, with Manchester placing third with $9.4m. Chelmsford sits in between the two metropoles, while Salford came fourth with $1.2m, creating a solid argument for bumping the total up to $10.6m, though this would still place Greater Manchester behind Chelmsford’s $15m. Red Flag Alert was the city’s biggest beneficiary, the report reveals, pulling in $5m Series A funding in January, again led by long-term investor Foresight Group, followed by Firenze with $3m in March. With at least one £5m+ Series A deal already taking place in Q2 the prognosis looks good for the city retaining its spot.
The overall UK fintech space attracted a total of $447m in Q1 2025 according to the report, reflecting a 65% decline from the $1.3bn 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.
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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 London-based financial crime-fighting AI Quantexa last month.
The Banking Tech segment witnessed $213M in funding in Q1 2025, a 72% decline compared to $782M raised in Q1 2024, but a substantial increase of 308% compared to $52.1M raised in Q4 2024.
The Investment Tech segment brought in a total of $90M in Q1 2025, compared to $192M witnessed in Q4 2024, a decline of 53%, but a YoY increase of 9.6% from $82.1M raised in Q1 2024.
Disappointingly, the report noted that 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, RedCloud, went public in Q1 2025 and Q1 2024 each, while no IPO was observed in Q4 2024.
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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.
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 the quarter.
Overall, the report notes that 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, although the UK is hardly alone in this given global market uncertainty across the board.
