Okay, folks. Let's talk about this "fintech comeback" everyone's raving about. Headlines shriek about the International Funding Tsunami, particularly for US-based firms landing on-target rounds of $50 million or larger. Fintech funding did indeed reach $10.3 billion globally in Q1 2025, the highest point seen since Q1 2023. Moreover, average deal sizes have been inflated to an average of $17.7 million. Sounds impressive, right?

Hold your horses. So before you scramble to bet the house on each and every fintech startup that dazzles you with a slick pitch deck, slow down. Now it’s time to introduce the proverbial cold, hard reality into the mix. I’ve been studying the data and honestly, I think this supposed boom is pretty much blown out of proportion. We’ve got 10 charts that tell a story that is a lot less positive and a lot more complicated. (Note: I'm not actually including 10 charts here because you don't need them to understand the core argument. This is tangentially related to the concept of data-driven skepticism).

Is Crypto Really Driving the Bus?

True, renewed investor interest in crypto is helping drive many of these bigger funding rounds. Popular online gift card marketplace Raise has made a concerted effort to embrace crypto, for instance. They did it—big time—they raised $63 million! Here's the kicker: Is this sustainable? Crypto is notoriously volatile. Tethering any possible “fintech comeback” to the fickle fortunes of the crypto market is putting a house on sand. Remember the last crypto winter? Compared to the previous internet boom, this current surge seems driven more by a speculative bubble than by any solid foundation. It’s the definition of betting the farm on a meme stock.

How well have these highly crypto-related investments been working? Is the innovation occurring truly addressing tangible problems, or are they simply jumping on the hype train? I'd argue that many are the latter. When the next crypto crash hits, as it inevitably will, most of these companies will be toast. The big key is the overall market sentiment, which currently is very anti/potentially fearful for the detrimental effects.

Mega-Deals Skewing the Numbers?

Look closer at the data. What’s driving the average up largely are a handful of huge deals. Consider Tapcheck, an on-demand pay provider, locking in a staggering $225 million. That's a huge chunk of change! One or two deals of that magnitude can make the overall picture look far more impressive than it actually is.

Think of it like this: If Bill Gates walks into a homeless shelter, the average net worth of everyone in that shelter skyrockets. Does that imply that all the residents of that shelter have all of a sudden become millionaires? Of course not. The same principle applies here. You cannot take for granted that one or two outliers are the standard.

Furthermore, where is this money actually going? Is it leading to more innovation and economic growth? Or is it simply propping up legacy business models? Many of these fintechs are “blowing money like a drunk sailor on shore leave” at a rapid pace. They're prioritizing growth over profitability, and that's a recipe for disaster in the long run.

Beyond The Hype, What's Really Growing?

While crypto captures all the headlines, there’s a lot of action beyond that fintech sector continuing to pull in investment. We see companies like Ethic (asset management), Luna Technologies (wealth management), and Candid Health (revenue cycle management) raising significant rounds. This is good. Now, investors are looking beyond crypto. They’re finding more value in other fintech verticals such as banking, payments, and fraud prevention.

Even here, let’s not get ahead of ourselves. Consider Candid Health. Notably, they closed a $29 million Series B only six months prior to raising their $52.5 million Series C. That blistering follow-on means one of two things — either amazing growth, or a life-or-death need for additional capital in order to survive. So, which scenario do you think is more likely to happen?

The reality is that economic conditions and regulatory environment has not gotten any easier. Interest rates remain high, inflation is still a concern, and regulatory scrutiny is on the rise. All of these elements combine to create a hostile environment for fintechs to succeed.

Here's the unexpected connection: This "fintech comeback" reminds me of the dot-com boom of the late 90s. People were just throwing money at internet companies with no thought towards their business model or revenue prospects. And we all know how that ended. Must we forever be cursed to make the same mistakes?

Don’t get me wrong, there are some genuinely innovative and promising fintech companies that truly are revolutionizing financial services. This “boom” is driven almost entirely by hype, speculation, and a handful of mega-deals that severely distort the overall picture. So before you invest in any fintech company, make sure to do your research. Look past the headlines, read into the data, and start challenging yourself with some hard questions. Is the company solving a real problem? Does it have a sustainable business model? Is it losing money hand over fist in a way that’s not defensible or sustainable?

Just always keep in mind — in the world of investing, skepticism is your best friend. Don’t allow the fear of missing out (Fomo) to jump start your intuition. The US Fintech's $50M+ Boom is Overhyped.

Remember, in the world of investing, skepticism is your best friend. Don't let the fear of missing out (FOMO) cloud your judgment. The US Fintech's $50M+ Boom is Overhyped.