Europe is home to more than 9,000 fintechs. It has produced global champions such as Wise, Klarna, and Adyen in payments, Revolut and Monzo in banking, and Mambu in B2B software. Across the Atlantic, the United States plays host to more than 13,000 fintechs, with leaders like Stripe, PayPal, and Chime. Both continents coexist and compete to produce the most influential companies in financial technology, though the paths taken and outcomes achieved often vary widely.
European fintechs raised €3.6 billion in the first half of 2025, 23% higher than in the same period in 2024, with funding on track to reach €7.6 billion for the year. In 2021, this total reached almost €16 billion. But 2021 was an anomaly, a sugar-high: a liquidity-driven bubble when venture investment hit record highs. We don’t expect to see those levels for another five to seven years, nor should we seek to recreate that. What matters now is building stamina, not chasing another rush. European fintech funding is on a steady path, tracking at 2019 levels.
The challenge for European markets isn’t chasing bubbles but building durable ecosystems where capital formation is balanced and sustainable. European scale-ups have long scaled under tighter capital constraints than their American counterparts. The result is companies built on sturdier foundations, less vulnerable to the ups and downs of funding markets. But also, a persistent excess demand for capital and, in turn, more reasonably priced assets in the small-to-mid-market.
Visible cracks
However, some cracks are starting to show. In 2025 so far, just two deals, Rapyd and FNZ, accounted for nearly half of European fintech funding, leaving much of the rest of the market with less attention. Concentration at the top is not unusual in periods of market caution, but it highlights the growing importance of building a stronger funding base for mid-market companies. By contrast, in the United States the top two fintech deals represented less than 10% of total funding, with capital spread across hundreds of Series A-C rounds.
This reflects the greater depth of US capital markets, supported by large institutional pools such as pensions, endowments, and crossover funds. Europe has historically relied more heavily on venture funds and corporate investors. For example, US public pensions and endowments together commit well over $1 trillion to private markets, compared with a far smaller role played by European institutions, where government agencies and corporates are more prominent backers.
This means that in quieter years, capital tends to cluster around the largest names. The result is a thinner middle market, not because of a lack of quality companies, but because the supporting financial structures are still developing. Strengthening that layer would help ensure a broader range of companies can scale and eventually reach the public markets.
The building backlog
Europe now faces an estimated €300 billion backlog of technology companies waiting to list. A treasure trove for businesses and employees seeking to be unlocked. But the backlog won’t clear overnight. Assuming 15% of this unicorn equity is floated, it would take nearly a decade to clear at the pace of 2024 listings regardless of where they list. And the bar today is set high for IPOs. The sub-$500 million revenue IPO is all but extinct. Mature private capital markets and strategic acquirers with heavy war-chests allow companies to stay private for longer, or forever.
However, these same features also allow Europe’s small-to-mid-cap exit market to excel. The continent delivers close to 1,000 technology exits annually of $100 million-$500 million, roughly the same size as the US market and with leaner capital journeys. It benefits from a deep pool of strategic acquirers, and active mid-market PE funds. Private equity buyout accounted for 40% of technology exits in the $100 million-$500 million range in Europe, roughly twice the proportion in the US. Europe’s exit market offers resilience and consistent outcomes for stakeholders, not reliant IPOs.
Europe does not suffer from a shortage of strong tech companies and not every company needs to raise capital as if it were on the path to €500 million+ revenue (ARR). A €50 million ARR business, given the right capital environment, can be more than good enough for founders, for investors, and for Europe’s competitiveness. But the continent could do more to open up routes for its businesses.
What the continent can do
First, exchanges need to allow companies to list with greater flexibility, so that European firms can list at scale without being forced to seek more favorable terms overseas. Second, the continent needs a vibrant mid-cap investor base, bridging the gap between venture and growth equity.
The companies are there, the exit market is vibrant, and the demand for scale-up capital is in excess. Pension funds, sovereign wealth funds, and institutional investors have a role to play in seeding this layer of the market, just as crossover funds have done in the US. For instance, private equity assets account for roughly 14% of US pension fund portfolios, today, European pension fund’s PE allocations are a fraction of this.
The next phase of Europe’s technology story should not be defined by bubbles or backlogs, but by building markets that allow its companies to scale sustainably, list locally, and thrive globally.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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