Capital and culture: Fintech funding in a demanding environment

After a tight few years for fintechs seeking funding, investor interest in the sector is seeing a revival. As Steve Lemon outlined in S&W’s recent webinar, global fintech funding was up by more than a quarter in 2025 and increased by a third in the UK, which accounted for not far off half the funding. Investment in British fintech from venture capital firms, like Volution, where Lemon is Operating Partner, rose for the first time in four years.

But there’s a sting in the tail. Globally, the number of deals fell by almost the same proportion as funding rose, with bigger, but far fewer deals. As Lemon explained, “Funding is up, but so is selectivity.”

In practice, a two-tier market has developed, he said, with investor appetite for AI, which attracted half of venture investments last year, significantly greater than for other fintech businesses. The latter are much less likely to feel funding has improved.

“It’s definitely still a very challenging market if you don’t have an AI story,” said Lemon. Even in AI, he added, the market is a little “less frothy” than at the peak of excitement over the technology.

As S&W Partner Tom Lewin noted, investors are taking a highly disciplined approach.

“There’s a real focus on fundamentals, and the path to profitability is a key part of every conversation,” he said. “People want to see growth, but not growth at any cost.”

Investors are also looking closely at a wide range of issues, including operational resilience, governance and cyber security, as well as a clear path to profitability, he added.

That means all businesses need to be able to present a strong case for funding. And they should start early. As S&W advisory consulting practice Partner Sophie Long noted, it can take years to build investor relationships, which can be challenging while also running the business.

Lemon, who before working in venture capital cofounded CurrencyCloud, which was sold to Visa for $1 billion in 2021, agreed. 
“You don’t want to be raising money when you need the money,” he said.

Entrepreneurs should map their ecosystem of funders so they can target those investing in their space and stage. When they come to fundraising, businesses should avoid wasting time and effort pitching off-mandate or to funds that aren’t actively deploying.

“Make sure you qualify the universe of potential investors,” Lemon advised.

The same applies to inbound interest. As Lewin noted, promising firms are frequently the focus of investor interest, and it’s often worth engaging and building relationships with these potential funders.

“But do it cautiously, and make sure you remain in control of the conversation and information you share,” he warned.

Starting the process early doesn’t just give time to sift through funders to find the right partner; it also gives the business time to ensure it’s ready to move when the time is right and doesn’t waste funders’ time.

“There’s nothing more frustrating than seeing a half-finished pitch deck or financial models that are still a work in progress,” said Lemon. 

Fintechs seeking funding need to have both a clear articulation of the business case and a data room ready with the documents covering every facet of the business, from corporate and legal matters and regulatory and compliance issues to financial projections, scenario analysis and key commercial contracts.

“It will be a long list,” said Lewin. “People often underestimate the depth of due diligence.”

Even then, not everything can be captured in data. The people are also critical. Organisational charts can help investors understand responsibilities and roles, but they only take you so far.

“Culture is critically important,” said Lemon.

And while it’s important to investors, it’s also critical internally, as Lewin noted. “There needs to be very clear alignment within your organisation. Between the board, CEO and existing shareholders, you need to make sure everyone’s aligned,” he said.

“You don’t want to start the process and find that internally you’ve got a whole load of differing options.”

And it’s not just the leadership, but key talent you will need to keep on board.

Externally, the right incentive structures for employees can help reassure investors, explained Dilpa Raval, S&W Director specialising in employee incentives.

“A clear incentive strategy helps demonstrate that the leadership understands dilution, cost management and value creation,” she said. 

“Having something that’s transparent in terms of your equity and reward framework will reduce investor concern about future unexpected cash burn or having misaligned leadership or founders in the business.”

Internally, meanwhile, incentives help attract and retain the talent that will drive the results investors are looking for.

“Fintechs need heavily technical people, and they are not necessarily easy to come by,” said Raval. “These individuals now value equity participation. They want to share in the upside, so it's not just about the base salary anymore.

“Without something that's properly structured, companies will struggle to pull people in.”

Sorting this out early and deciding on issues such as the option pool of capital available to employee incentives provides certainty for everyone – employees and investors.

And if founders feel unsure how to navigate such decisions, they should seek advice. As Lemon said, “You don't have to have the answers; you just need to know that you've got to go and find them.”