European FinTech Funding Set to Rise 18% in 2026 as Smaller Deals Gain Momentum

European FinTech investment is showing signs of steady recovery, with funding rising during the first half of 2026 and transactions below $100 million making a stronger contribution to the market.

European FinTech funding reaches $9.2 billion in H1 2026

European FinTech companies attracted $9.2 billion across 386 deals during the first half of 2026. That represents a 5% year-on-year increase from the $8.7 billion raised across 393 deals in H1 2025.

Although the number of transactions declined by 2%, the average deal value increased. The typical European FinTech deal reached $23.8 million in H1 2026, up 8% from $22.1 million during the same period last year and above the $20.9 million average recorded throughout 2025.

The results suggest that the market is maintaining its stability, with slightly fewer transactions being offset by larger average funding rounds.

Compared with the full-year figures for 2025, H1 2026 already represents 59% of the previous year’s total funding and 52% of its deal volume. In 2025, European FinTech companies raised $15.5 billion across 742 transactions.

European FinTech investment could reach $18.4 billion in 2026

If the investment pace recorded in the first half continues, European FinTech funding could reach $18.4 billion by the end of 2026. This would represent an 18% increase compared with 2025.

Under the same projection, the market would complete approximately 772 deals during the year, a 4% rise from the 742 transactions recorded in 2025.

The projected increase is being supported particularly by the performance of deals below $100 million. These smaller transactions generated $3.8 billion in H1 2026, an 11% increase from the $3.5 billion raised in H1 2025.

Deals worth $100 million or more accounted for $5.3 billion in funding during the first half, representing a modest 2% increase from the $5.2 billion recorded a year earlier.

Larger transactions represented 58% of total H1 2026 funding, compared with 60% in H1 2025. Meanwhile, sub-$100 million deals increased their share from 40% to 42%.

This distribution remains broadly consistent with the full-year figures for 2025. Large deals generated $9.1 billion, or 58% of annual funding, while smaller transactions contributed $6.5 billion, equal to 42%.

The relatively stable split indicates that European FinTech investment continues to benefit from a balanced mix of major funding rounds and smaller growth-stage transactions.

Allica Bank secures $155 million Series D funding

Allica Bank was among the most notable European FinTech funding stories during the first half of 2026. The digital business bank raised $155 million in a Series D round, giving the company a valuation of $1.2 billion.

The funding round included support from Ventura Capital, GLG and Sona Asset Management, along with existing investors TCV and Blue Owl.

Allica Bank focuses on established small and medium-sized businesses. Since launching its lending services in 2020, the bank has provided the equivalent of $5 billion in lending and attracted approximately $6.6 billion in customer deposits.

The company now serves more than 30,000 small and medium-sized businesses, representing about 5% of its target market.

Its product range includes commercial mortgages, asset finance and bridging finance. In October 2025, Allica also entered the embedded finance sector through the acquisition of London-based FinTech company Kriya.

The latest investment will be used to expand lending, strengthen Allica’s proprietary technology infrastructure and develop artificial intelligence-powered solutions for small and medium-sized business lending.

The bank also plans to expand beyond the UK for the first time. Its longer-term objective is to secure a 10% share of the small and medium-sized business finance market by 2028.

European FinTech market outlook

The H1 2026 results point to a European FinTech sector that is growing gradually rather than experiencing a sharp rebound. Funding has increased, average deal sizes are higher and smaller transactions are gaining ground.

If current market conditions continue, the sector could deliver stronger annual funding in 2026, supported by continued investment across both major FinTech companies and emerging businesses seeking sub-$100 million rounds.

Source: fintech.global