California Cemented Its Place As The US FinTech Hub With Over A Third Of The Deals For Q1 2025
US FinTech deal activity dropped by 58% QoQ in Q1 2025
In Q1 2025, the US FinTech market experienced a sharp decline in both funding and deal activity compared to the same period in 2024.
Total funding dropped to US$9.6bn, representing a steep 54 per cent decrease from the US$20.8bn raised in Q1 2024.
Deal activity also saw a significant contraction, with only 458 transactions completed, marking a 58 per cent decline from the 1,081 deals recorded in the previous year.
This downturn highlights ongoing investor caution in the sector, reflecting broader macroeconomic challenges and a more selective funding environment.
California cemented its place as the US FinTech hub with over a third of the deals
California remained the most active state in Q1 2025, recording 163 deals (36% share), though this represented a 52 per cent decline from the 342 deals completed in Q1 2024.
New York followed with 100 deals (22% share), down 39 per cent from 163 in the previous year. Texas completed 29 deals (6% share), a 55 per cent drop from the 65 deals recorded in Q1 2024.
Despite the overall decline in deal volume, California and New York increased their share of total activity, suggesting that investment is becoming more concentrated in major financial hubs.
Meanwhile, Texas maintained its position as the third most active state, but its reduced deal count reflects the broader market slowdown impacting smaller FinTech ecosystems.
Mercury Financial, a leading provider of banking solutions for tech startups, secured one of the biggest US FinTech deals of the quarter with a US$300m funding round
The funding round was led by Sequoia Capital Management LP, alongside Spark Capital, Marathon Asset Management LP, Coatue Management, Charles River Ventures, and Andreessen Horowitz, the investment underscores confidence in Mercury’s innovative approach to startup banking.
Through partnerships with FDIC-insured banks, Mercury offers business checking and savings accounts, international wire transfers, and debit cards, complemented by advanced financial tools such as cash flow analytics and customizable dashboards.
The fresh capital will fuel product development, potential acquisitions, and team expansion, reinforcing Mercury’s commitment to driving financial innovation.
Additionally, its venture debt financing initiative, launched in 2022, provides startups with alternative funding options, while recent enhancements to invoicing and receipt management streamline financial operations.
This funding round solidifies Mercury’s position as a key player in the evolving FinTech landscape, empowering startups with modern, technology-driven financial services.
