Fintech funding: Tariff-related uncertainty weighing on funding, M&A, IPOs

As President Donald Trump ’s tariffs slowly start taking effect, the fintech world is concerned about their potential impact. Banks and fintechs are taking a wait-and-see approach before making major decisions, Gunnar Millier , senior manager of advisory services, M&A and divestitures at Deloitte , told Bank Automation News . [caption id="attachment_221916" align="alignright" width="300"] (Courtesy/CanStock)[/caption] Tariffs will primarily affect fintech funding by tightening liquidity in the venture market, Lindsay Fitzgerald , founding partner of fintech VC firm Vesey Ventures , told BAN . “With limited liquidity and [limited partnerships] naturally seeking diversification, we’ll likely see less funding available for new fintech players,” she said. BY THE NUMBERS : According to think tank CBInsights ’ “State of fintech funding Q1 ’25” report, published April 18: Total funding raised stood at $10.3 billion, up 32% year over year, while total deal count dropped 30% YoY to 77. Crypto platform Binance gave the total a major boost with the $2 billion it raised from MGX , an AI and technology investor based in Abu Dhabi, on March 12; The share of AI companies raising money jumped to 15.7%, up from 9.4% in Q1 2024; Nearly 52% of the money for early-stage companies (those 5 to 10 years old) went to digital asset companies; Nearly 41% of all global funding — $4.4 billion across 322 deals — was raised by U.S. firms; and Three unicorns were minted, down from six in Q1 2024. Trump’s tariffs were imposed on April 2 and their impact will be reported in CBInsights’ Q2 report. Many LPs [limited partnerships] are waiting for mature companies like Klarna , Chime and Plaid to go public because LPs have “significant capital tied up in late-stage ventures,” Fitzgerald said, adding that if mature companies go public, it will give them liquidity to invest in new startups. Cross-border dealmaking to slow Cross-border dealmaking will likely slow as companies face additional foreign exchange risk and rising dealmaking costs, Fitzgerald said. “To avoid the current volatility of global markets, VCs may prioritize deploying capital within their own countries,” she said. Cross-border deals may slow, but the best opportunities — particularly those with strong fundamentals and a clear path to scale — will continue to attract money, regardless of geography, Ed Barrow , chief executive of cloud expense management company Cloud Capital , told BAN . Slowing M&A M&A was expected to rebound under Trump’s administration amid comparatively low regulatory burdens, but that hasn’t happened yet, Masaki Noda , managing director in the transactions and M&A advisory practice at consultancy Deloitte, told BAN , adding that while regulations are coming down, there is a new sheriff in town called “uncertainty” that is stopping many deals. M&A is heavily predicated on conviction. Buyers and sellers each need to believe there is an equal exchange of value in any transaction, Alex DeOteris , managing director at financial advisory firm Solomon Partners , told BAN . “The implicit potential costs of tariffs aside, the more near-term drag on M&A may have more to do with the uncertainty and volatility created by the new dawn of unpredictable tariff-centric economic policy,” DeOteris said. When decisions are full of unknowns, it’s difficult for buyers to confidently underwrite sellers’ projections and business plans, and for sellers to believe they’re getting fair value for their business, he said. “Not withstanding this backdrop, we suspect larger, well-funded strategic acquirers may be best situated to take advantage of the current environment,” DeOteris said. “Smaller fintech platforms — especially unprofitable early-stage businesses or those with limited access to capital — may struggle as investors adopt at least a wait-and-see approach.” Recent M&A deals include: Mastercard acquired 3% of Atlanta-based cross-border payments company Corpay on April 29 for an undisclosed amount; Cadence Bank will acquire Industry Bancshares , the holding company of six Texas community banks, in an all-cash transaction valued between $20 million and $60 million, according to Tupelo, Miss.-based Cadence’s April 25 release; Boston-based Eastern Bankshares will merge with Brockton, Mass.-based HarborOne Bank in a $490 million stock and cash deal, according to Eastern Bank’s April 24 release. IPO window closed for now Investors and VC firms have been waiting for the U.S. IPO window to open, but recent IPOs haven’t fared as well as expected, Millier said. Nvidia -backed data storage and AI company Coreweave went public on March 28 at $40 per share, but the stock has gained only 2.85% since then. “Tariffs are another potential headwind for IPO candidates, increasing market volatility and investor risk aversion,” Cloud Capital’s Barrow said. “Companies preparing to go public will need even greater focus on financial resilience, operational flexibility and a clear, predictable path to profitability.” Buy now, pay later provider Klarna filed for an IPO on March 14, stating that revenue jumped 24% YoY in 2024 to $2.81 billion, according to its prospectus filed with the Securities and Exchange Commission . Klarna now wants to delay the IPO amid tariff uncertainty, according to an April 4 story in the Wall Street Journal, and ticketing giant StubHub might follow suit. As uncertainty rises, buyers and dealmakers are more cautious about their bets and are including tariff-related exposure to their calculations, Mark Williams , global chief revenue officer at data and analytics company Datasite , told BAN . “This unpredictability means dealmakers must be vigilant about policy changes that could accelerate or drag out deal timelines,” Williams said. “The key is preparation, anticipating increased levels of review, longer review processes, and leveraging technology to expedite diligence.” Even with uncertainty, these companies raised money this month: Data sharing platform Plaid raised $575 million from FI Franklin Templeton on April 3, bringing the total it has raised to $1.3 billion since its 2013 inception; Dubai-based payments company Fuse Financial Technologies raised $6.6 million on April 3 in series A funding round from VC firms including Northzone , Flourish Ventures and Alter Global; Seattle-based AI-powered loan origination assistance provider Friday Harbor raised $6 million on April 15 from Abstract Ventures; AI-documentation service provider Reducto raised $24.5 million on April 25 in a series A round from Benchmark , bringing the total it has raised to $33 million since its inception in 2023; and Cybersecurity company Miggo raised $17 million in a series A round on April 17 from SYN Ventures.

Fintech funding: Tariff-related uncertainty weighing on funding, M&A, IPOs

Plaid, Miggo, Reducto, Fuse among companies that raised funds this month

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Fintech funding: Tariff-related uncertainty weighing on funding, M&A, IPOs

Plaid, Miggo, Reducto, Fuse among companies that raised funds this month

Digital banking transactions: Police FCU taps Mahalo for upgrade

Just Released! 2025 Strategy Benchmark

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