With a deep understanding of the forces shaping the financial technology landscape, Kofi Ndaikate is a leading voice in FinTech investment analysis. His work provides critical insights into the trends defining the industry, from market contractions to the rise of AI-driven platforms. Today, we delve into the turbulent US WealthTech sector of 2025, exploring the pressures of a sharp funding downturn, the geographic consolidation of major deals around established hubs, and the strategic importance of AI in securing significant late-stage investment.
In 2025, US WealthTech saw a 56% drop in funding, a much steeper decline than the 39% fall in deal volume. What specific pressures does this contraction in average deal size place on early-stage founders, and what practical steps should they now take during fundraising?
The numbers really tell a story of a market hitting the brakes. When you see total funding plummet by 56%, from $8.2 billion down to $3.6 billion, while deal volume “only” drops 39%, it’s a clear signal that the average check size has shrunk dramatically. For an early-stage founder, this means the fundraising journey is now an uphill battle. The pressure is immense because investors have become far more cautious and selective with their capital. Founders must now present a rock-solid case for profitability and sustainable growth, not just a vision for market disruption. This means focusing on core metrics, demonstrating a clear path to revenue, and being prepared for much deeper scrutiny during due diligence.
With New York and California tightening their grip on top-tier deals in 2025, what specific factors are driving this geographic rebalancing? Considering this shift, what unique advantages might emerging hubs like Ohio or Missouri offer to WealthTech startups compared to these established centers?
In a risk-averse climate, investors tend to retreat to what they know best, and that’s precisely what we’re seeing. The concentration of capital in familiar ecosystems like New York and California reflects a flight to safety. These hubs have a deep bench of talent, established networks, and a track record of successful exits, which makes investors feel more secure. However, the appearance of states like Ohio and Missouri in the top 10 deals for the first time is fascinating. For a startup, these emerging hubs can offer significant advantages, such as lower operating costs, access to untapped talent pools, and a supportive local business environment. They represent an opportunity to build a strong, capital-efficient company away from the intense competition and sky-high valuations of the coastal hubs.
Stash secured a $146m Series H round to accelerate its AI-driven “Money Coach.” What does this large, late-stage deal signal about investor priorities in a down market, and how crucial is a sophisticated AI strategy for achieving scale and securing capital today?
Stash’s massive $146 million round is a beacon in an otherwise gloomy market, and it sends a powerful message: investors are willing to write big checks for proven models with a clear technological edge. In a period of such sharp contraction, securing a deal of this size shows that sophisticated, practical AI is no longer a “nice-to-have”—it’s a critical differentiator. Stash isn’t just using AI as a buzzword; they’ve built a “Money Coach” that has already logged over 2.2 million user interactions, actively prompting people to make better financial decisions. This demonstrates a tangible return on technology that scales personalized guidance in a way humans can’t. For other companies, the lesson is clear: a well-executed AI strategy that solves a real user problem is one of the most compelling narratives you can bring to investors right now.
What is your forecast for US WealthTech funding and deal activity in the coming year?
Looking ahead, I expect the cautious sentiment to persist for at least the next few quarters. We won’t likely see a sudden rebound to the peak levels of 2024. Instead, the market will continue to favor stability and proven metrics over speculative growth. Funding will likely remain concentrated in later-stage companies that have demonstrated product-market fit and a clear path to profitability, much like the Stash deal. For early-stage startups, the bar will remain high, and we may see more consolidation as smaller firms struggle to secure follow-on funding. The key theme for the coming year will be efficiency—both in how companies operate and how they deploy capital to achieve sustainable growth.
