When the Covid-19 pandemic swept over the world, a shockwave spread across the financial market. The uncertainty raised questions about survivability and whether countless WealthTech startups might be forced to close their doors. However, the opposite occurred, leading to a short-lived boom.
A colossal $133.8bn was invested into the global WealthTech sector during 2021, across a total of 5,185 deals, according to research from FinTech Global. Since then, the total funding and number of deals has declined each year. In 2024, a total of $19.2bn was raised across 1,069 deals, and 2025 could see another decline, with just $4.5bn raised across 247 deals in the first six months of the year.
While this looks like the sector is in trouble, fincite founder & co-CEO Ralf Heim believes it shows the sector has matured. He said, “2021 was an exceptional year. An outlier for FinTech funding. FinTech as such got more mature which means fewer, but maybe larger funding rounds. And more private equity deals than venture capital.”
The seismic shift in funding might not only be a sign of a mature market, but also a sign of stabilisation after a period of reckless investing. Fredrik Davéus, CEO and co-founder of Kidbrooke, explained, “The market is still recalibrating from the excess of 2021. During that period, capital was cheap, and investors were willing to fund growth at almost any cost. What we’re seeing now is a natural correction. Funding has become more selective with investors increasingly looking for evidence of scalability, real-world adoption, and compliance alignment, especially within regulated industries like wealth management.
“In other words, the “growth-at-any-cost” era has given way to one that values more sustainable business models, proven technology, and measurable client outcomes.”
This sense of more calculated investments can be seen across the whole FinTech sector. The entire FinTech sector has seen a similar continuous decline in funding and deal volume since 2021 as seen in the WealthTech segment. A total of $374.8bn was invested across 16,212 FinTech deals in 2021 but had declined to $89.6bn through 4,401 deals by 2024. Funding is expected to drop again in 2025, with $64.9bn raised through 2,654 deals in the first three quarters of the year.
Consolidation of the market
This shift in investment strategy is leading to the consolidation of the WealthTech sector. Larger companies are absorbing smaller players, with some players moving towards becoming a financial super app capable of meeting all the financial needs of a client.
While consolidation is a natural cycle in a maturing market, Davéus emphasised it has benefits and negatives. He said, “Consolidation is a double-edged sword. On one hand, smaller startups face longer fundraising cycles and pressure to demonstrate traction early. On the other, those with the strong fundamentals: solid technology, domain expertise, and recurring revenues, are becoming highly attractive acquisition targets.
“In our space, we’re seeing large financial institutions increasingly prefer to collaborate with established WealthTechs that can offer regulatory transparency, robust APIs, and integration-ready analytics, rather than taking on early-stage experimental vendors. For smaller firms, that means the path forward is about credibility as well as creativity.”
With a more competitive market for funding, startups need to showcase their capabilities to stand out from the crowd. This means companies that can demonstrate their value are more likely to find investors to support their growth. There are countless ways to do this, with an obvious one being profitability. However, there are other factors that can make a company more appetising.
For instance, Heim currently sees B2B companies as a very popular area of the market. He said, “Investors look mainly at B2B. Given very successful B2C companies in this space, this is not always fair, but it is what we currently see. The focus here is on Software, AI and Infrastructure. Often Bundles of Software + Custody + Asset Management also show good traction.”
As for Davéus, he sees many investors interested in WealthTechs that can “demonstrate tangible value creation within existing ecosystems,” as well as those that can accelerate digital transformation for incumbents. He added that companies offering “For example, through data integration, analytics, or compliance automation, are seeing more interest than those targeting end consumers directly.”
Elsewhere, Davéus also sees a rising eagerness for robust, auditable and explainable AI and modular infrastructure solutions that can be easily embedded into existing systems. Enabling insurers and banks to scale personalised, compliance financial advice without having to replace existing legacy infrastructure, is very appetising in the market, he noted.
Another market boom?
The WealthTech sector has helped to transform the world of investing. What was once reserved for the wealthy has become greatly democratised to retail investors. People can easily monitor their investments via their phone and quickly build a portfolio without needing to engage an advisor. Even those with minimal disposable income can invest money, with some providers supporting investments starting as low as a dollar.
While the access to wealth management has already widened, there are still more people it can reach. Then there is the generational wealth transfer that will see younger, more tech-savvy investors look for providers that can meet their tech-focused demands. With this opportunity, it brings the question of whether there will be another WealthTech funding boom in the coming years.
Heim believes the WealthTech market will continue to grow in the coming years. He said, “I think the WealthTech Market will remain growing strong. And if alone for the reason, that retail and affluent customers will not be safe in their retirement. The Market has sufficient inefficiencies. Some examples: We do not have a real Neo private bank today; the Tech-Maturity in Institutional Investment Markets is far from great; infrastructure for Investment is outdated. There is a lot of work to be done; as the number of human advisors shrinks and AI has strong potential to step in.”
Davéus also sees strong growth in the WealthTech sector, and even a potential funding boom, but one that looks different to 2021’s funding surge. He said, “The next boom will be powered by infrastructure-level innovation; platforms that make wealth management scalable, compliant, and personalised across channels.
“As regulation tightens and customer expectations evolve, financial institutions will need partners that enable transparency and automation without sacrificing trust. We’re already seeing early signs of this shift. The winners of the next cycle will be those building the rails: the analytics, APIs, and robust, auditable and explainable AI.”
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