FinTech Fundraising 101: Strategies for Success in a Challenging Investment Climate 

Today
AI in FinTech
early-stage FinTech funding
embedded finance trends
Nicolai Chamizo, Founder and CEO of Incore InvestBy Nicolai Chamizo, Founder and CEO of Incore Invest.The FinTech funding landscape has shifted dramatically in recent years. The days of abundant capital and sky-high valuations are over; startups now face a far more selective and challenging investment environment. According to a recent survey, 72% of FinTechs are actively seeking funding, yet a quarter have been forced to rethink their strategies due to limited success.For early-stage FinTechs, this presents both a challenge and an opportunity. While the barriers to securing investment have grown, the right businesses with a clear market need, solid unit economics and a scalable proposition are still attracting capital. The key is knowing how to navigate this new reality and adapt to investor expectations.The Investment Climate is More Selective and More ScrutinisedThe FinTech sector is facing a funding reset. In 2024, global venture capital investment in FinTech reportedly declined by 20%, reaching its lowest level since 2020, as investors became more cautious due to economic uncertainty, rising interest rates and increased regulatory scrutiny. While some capital has returned in 2024, it is clear that investors have fundamentally changed their approach.Early-stage startups face heightened scrutiny. Investors are no longer simply backing bold ideas; they want evidence of product-market fit, strong revenue potential, and a clear path to profitability. The days of funding high-burn FinTech with vague monetisation strategies are fading. Instead, investors are prioritising companies that demonstrate financial discipline, operational efficiency, and tangible value creation.One of the most visible trends is the focus on FinTech, which leverages AI, embedded finance, and regulatory technology (RegTech). These areas align with investor priorities around automation, compliance, and cost efficiency. Meanwhile, startups in oversaturated or commoditised verticals, such as buy now, pay later (BNPL), find it much harder to raise capital unless they offer clear differentiation.How FinTechs Can Adapt: Strategies for Securing FundingA shift in approach is essential for FinTechs looking to raise investment in this environment. The following strategies can help startups stand out and improve their chances of securing capital. Refine Your Value Proposition and Market Positioning
Investors need an apparent reason to back a FinTech, particularly in a crowded market. That means founders must be able to articulate their unique value proposition in a way that resonates with investors. The key questions that need answering are:What problem are you solving, and why is it urgent?
How is your solution fundamentally different from existing alternatives?
What is the total addressable market