Irish fintech sector sees large drop in funding amid investors caution
Sector Istock Picture: As Investment Expected In Is Returns File To With Grow The Deal 2025 In Steadily Volumes Rising Confidence
Funding to the Irish fintech companies has seen a significant decline during the first half of this year with just €22m invested as the sector globally faces cautious investor sentiment, a new report has found.
According to the State of European Fintech report published by investment firm Finch Capital, funding to the Irish fintech sector hit €22m between January and June. This excludes a single large outlier deal agreed in March which saw Dublin-based software firm SoftCo acquired by private equity firm Keensight Capital in a deal reportedly worth over €100m.
This is compared to the €212m recorded during the first six months of 2023.
One of the largest deals done so far this year is a €10m funding round for Cork headquartered Zartis.
The report said that this contraction reflects broader market trends as the global fintech sector faces “economic headwinds and cautious investor sentiment”.
The report expects investment in the sector is expected to steadily grow in 2025 as confidence returns with rising deal volumes.
Finch Capital partner Mike Brennan said challenges the sector faced in 2023 were necessary for it to mature and “become more sustainable”.
Across Europe, the UK has increased its dominant role in the region's fintech sector, accounting for two thirds of the total volume of deals reached across the continent in the first half of this year.
Total capital invested in European fintech companies during the first six months of the year fell by 25% to €2.9bn.
The report also found that funding rounds for fintech unicorns have slowed, with investors prioritising companies with solid financial fundamentals and avoiding overly ambitious valuations based on hyper growth and unproven profitability.
It also said there are early signs of recovery in Europe’s fintech jobs market, which has grown by 10% year-on-years. The report said this suggests sectoral resilience could support a rebound in investment activity, reversing the contraction seen in previous years.
With many companies now chasing developments in AI, Mr Brennan said the next 12 to 18 months will mark a turning point for fintech in Europe.
“The next wave of fintech success stories will likely be built on sound financials rather than rapid revenue growth alone. The next wave of fintechs is shifting from unicorns to 'half-a-corns,' with £500m (€600m) valuations becoming the new benchmark.”