UK Firms Capture One-Third of Top 10 European FinTech Deals Amidst 26% Funding Decline in Q1

In the first quarter of 2025, the European FinTech landscape experienced significant changes, showcasing a 26% decline in funding compared to the previous year. This downturn in European FinTech investment reflects broader market challenges, but notable developments emerged, particularly in the UK and Germany.

Decline in European FinTech Funding

During Q1 2025, the European FinTech sector raised approximately $5.4 billion across 185 deals. This marks a considerable decrease of 26% year-over-year and a staggering 59% drop in deal volume from Q1 2024, which saw $7.3 billion raised across 456 deals.

This decline indicates:

• Reduced investor appetite for FinTech investments.
• A more selective funding environment influenced by macroeconomic headwinds.
• A significant drop in early-stage funding activities across Europe.

Despite the decrease in deal count, larger, later-stage funding rounds have contributed to maintaining overall investment figures.

UK’s Dominance and Emerging Markets

The United Kingdom continues to be a major player in the European FinTech scene, securing a third of the top 10 deals. However, its grip on the market has slightly loosened, with its share of top deals decreasing from six in Q1 2024 to three in Q1 2025. Other notable countries include:

• Germany and France: Each country secured one top deal.
• The Netherlands: Dropped out of the top rankings this year.
• Switzerland: Emerged with two top deals, showcasing a diversification in FinTech activities.
• Malta, Portugal, and Jersey: These smaller markets are also gaining traction.

This shift illustrates a growing interest in niche and emerging financial hubs beyond traditional Western European markets.

Solaris: A Major Player in Q1 2025

Among the notable funding rounds, Solaris, a German Banking-as-a-Service (BaaS) provider, stood out by securing $145 million in a Series G funding round. This investment was led by Japan’s SBI Group, alongside existing client Boerse Stuttgart Group and other strategic partners.

This funding comes at a crucial time for Solaris as it undergoes restructuring, which includes:

• A workforce reduction by one-third.
• Divestment of its UK-based Engage business.

The capital raised will not only bolster Solaris’ core capital base but also support its path to profitability and accelerate market expansion. This follows a $100 million financial guarantee in 2023 for a major contract with ADAC, and a previous $100 million raise in its Series F, indicating a resurgence in Solaris’ momentum.

Conclusion

As the European FinTech sector adapts to changing market dynamics, the mixed results from Q1 2025 highlight both challenges and opportunities. Continued innovation and investment in emerging markets could reshape the landscape, providing fertile ground for future growth. For more insights on the evolving FinTech industry, visit our FinTech Insights page.