From AI’s growing dominance to a crypto resurgence, the CBInsights team break down the trends shaping fintech ecosystem.
As noted in the CBInsights research report, on its face, fintech funding appeared to have had “a strong quarter in Q1’25, topping $10B for the first quarter in 2 years.”
However, one deal — a $2B minority round for crypto exchange Binance — made up “nearly 20% of the funding.”
The research report from CBInsights also mentioned that “global dealmaking declined for the fourth straight quarter.”
Amid the mixed bag in funding, though, “several areas of momentum stand out: AI, crypto, and digital banking.”
Key takeaways from the CBInsights report include:
- Fintech funding gets a big boost from Binance. Funding to fintech companies increased 18% in Q1’25, its biggest jump in 3 quarters. The metric topped $10B for the first time in 2 years, propped up by 1 big deal: crypto exchange Binance’s $2B corporate minority round. Without that deal, Q1’25 funding would have trailed Q4’24.
- AI is gathering steam in fintech. AI companies raised a record 16% of all fintech deals in Q1’25. AI’s steady increase in deal share follows trends in the broader venture market. AI companies’ share of fintech deals has more than doubled since OpenAI launched ChatGPT in 2022.
- Crypto is resurging with investors. More than half (52%) of the biggest early-stage deals went to companies developing digital asset solutions, including blockchain tech, crypto exchanges, payments platforms, security, and more. The quarter also saw a new crypto banking unicorn.
- Digital banking remains resilient. Despite funding and deals declining in Q1’25, digital banking companies have the highest average CB Insights Mosaic score, which measures business health and growth potential, among all fintech verticals. Challenger banks are fueling the high scores: 6 of the 7 digital banking companies with Mosaic scores of more than 900 fall into the category.
Funding to fintech companies increased “18% in Q1’25 — its biggest jump in 3 quarters — and topped $10B for the first time in 2 years.”
But one-fifth of the funding came “from 1 deal: crypto exchange Binance’s $2B corporate minority round from Abu Dhabi-based AI investor MGX.”
The massive round was the largest ever investment in “a crypto company.”
Along with other finserv leaders’ activity — such “as Stripe’s October 2024 acquisition of stablecoin platform Bridge for $1.1B — the deal is a marker of growing institutional interest in digital currencies.”
Meanwhile, dealmaking fell by “3% to 777 to mark a fourth straight quarter of decline.”
Overall, big rounds made up a “larger share of fintech funding in the quarter.”
Mega-rounds (deals of $100M+) made up “44% of all funding, their highest quarterly share since Q1’23.”
That said, the total number of “mega-rounds in the quarter still declined to 14 in Q1’25, down from 22 in Q4’24.”
Mega-round recipients included “a mid-stage digital bank (Mercury), a late-stage buy now, pay later provider (Tabby), and an early-stage credit card issuer (Plata).”
Investors also backed substantial rounds “in digital currencies: in addition to Binance, mega-rounds went to an early-stage DeFi player (ZENMEV) and a mid-stage crypto wallet (Phantom).”
In line with the broader venture market, AI companies “make up a growing share of fintech dealmaking.”
AI companies that offer fintech solutions “raised 16% (122) of all fintech deals in Q1’25. AI companies’ share of fintech deals has more than doubled since OpenAI launched ChatGPT in late 2022.”
AI’s share of total fintech funding also “ticked up in Q1’25, to 17%.”
The biggest deal to an AI-powered fintech company was “a $200M round for home equity line of credit provider Figure, which is using AI to speed up loan originations and other processes.”
Investors’ interest in crypto jumped in Q1’25.
Along with significant rounds for several mid- and late-stage digital currency companies, investors also “poured money into early-stage crypto: 52% of the biggest seed and Series A deals in the quarter went to companies developing digital asset solutions — up from just 24% of the top early-stage deals in Q4’24.”
Meanwhile, Swiss digital asset bank Sygnum was “one of the quarter’s 3 new fintech unicorns.”
The strength in crypto investment “across metrics (mega-rounds, early-stage deals, unicorns) sets the stage for blockchain to play a larger role long-term across financial services like payments and investment.”
Despite a quarter when digital banking funding and deals “both declined, digital banking companies remain resilient.”
The report further noted that among major fintech verticals, digital banking companies have “the highest average CB Insights Mosaic score — which measures private-company health and growth potential — across all fintech verticals.”
Challenger banks are “fueling the high scores: 6 of the 7 digital banking companies with Mosaic scores of 900+ fall into the category.”
This includes US-based Mercury, which raised “the second-largest equity deal in Q1’25: a $300M Series C round from investors including Sequoia Capital and Andreessen Horowitz.”
The company, which provides business banking, says “the new funding will support acquisitions and expansion.”
The CBInsights report also noted that other high-Mosaic challenger banks that raised funding in Q1’25 “are establishing themselves in market niches that have proven more difficult for traditional banks.”