There’s been a lot of commentary recently about FinTech funding “slowing down”, but the reality on the ground is more nuanced. Capital is still very much available (particularly in the UK) but investors are being far more deliberate in how they are deploying it. There are fewer headline grabbing rounds and a far more detailed examination of how businesses actually operate. Investors are spending more time scrutinising the economic fundamentals of the business, its resilience over time and the extent to which regulatory obligations are understood and managed in practice.
The companies that are having the most success fundraising today are those that can show how their revenue becomes repeatable and how margins improve as the business scales, rather than relying on continued deployment of capital to drive their growth. Not many investors expect early profitability, but there is a growing expectation that the path to it should be credible and reasonably well-defined. Pointing to the fact that a large theoretical market is no longer sufficient on its own.
Regulatory position remains one of the clearest signals of a business’s ‘investability’. Businesses that have already navigated the approvals process, or that have established and well-structured partnerships with regulated institutions, tend to attract stronger interest. Crossing that threshold reduces uncertainty and the diligence required for investors.
There is also continued momentum in areas where demand is clear and defensibility is achievable. This includes SME credit platforms with genuinely differentiated underwriting approaches, B2B payment infrastructure tailored to specific sectors, and financial services embedded within software platforms that are already part of businesses’ day-to-day operations. Each of these business models benefit from existing distribution channels and from addressing practical friction in operational workflows.
Technology-led financial infrastructure also remains an area of focus for investment. The focus here is less about AI as a descriptor and more about delivering improvements in areas such as underwriting, fraud detection, compliance automation and reconciliation processes. The most attractive businesses in this category are those that enable stability and efficiency rather than those presenting technology as an end in itself.
There is also some evidence of more price-sensitive investment beyond the UK. As noted, the UK remains the primary focus for investors but certain funds are considering opportunities in Europe where valuations are more measured and competition is lighter.
Across all of these themes, go-to-market efficiency is a common thread, with businesses that scale through partnerships, integrations or embedded distribution generally being viewed more favourably than those relying primarily on paid customer acquisition.
More selective investment naturally leads to a more active and detailed assessment of risk. Regulatory scrutiny continues to increase, particularly around data governance, outsourcing arrangements, open finance infrastructure and the application of AI in decision-making processes. Consequently, transactions are taking longer and involve deeper diligence, particularly in later-stage investments.
M&A activity continues, again with deeper diligence, but buyers are also now giving earlier and greater consideration to post-deal integration issues. Data architecture, senior managers and certification regime (SMCR) responsibilities, organisational culture and operational resilience are being examined at the outset of the transaction, rather than left to resolve following completion. This is having an impact on deal feasibility and valuation as well as timelines.
The founders raising most effectively are those who can explain, plainly and consistently, what the business does, how it makes money, why customers choose it, how the economics strengthen with scale and how relevant regulatory frameworks are being managed. There is increasingly less focus on presentation and more on the clarity of the detail.
Investors also seem to be adopting a more hands-on approach, not because of market weakness but because success is more dependent on disciplined execution of the business plan than simply on speed of growth.
Strategic acquirers, similarly, are integrating operational and regulatory considerations into their transaction rationale from the outset.
There is substantial capital available, but it is being directed towards businesses built on robust foundations and capable of scaling in a sustainable and defensible manner. The question investors are asking is no longer solely how quickly a company can grow, but whether it can grow in a way that is sustainable and resilient over time.
Ashfords is well experienced supporting early stage and scaling regulated firms on their growth journeys. We can support through fundraising and investment, securing regulatory approvals, launch of new products and services, IP and brand protection and all other commercial needs. If you’d like to learn more please get in touch with Sam Brown.
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