In Q1 2026, venture capital (VC) investment in the global fintech industry fell in both volume and decline, marking a shift from the previous quarter.

According to new data released by CB Insights, fintech funding dropped 37.3% quarter-over-quarter (QoQ), reaching US$12.1 billion. Deal count slumped 19% QoQ to 762 transactions.

This decline contrasts sharply with the broader VC landscape, which saw total funding double QoQ, surging from US$142.3 billion in Q4 2025 to its highest level ever of US$285.5 billion in Q1 2026.

The downturn underscores a shift in investor focus, marking a decline in the dominance of fintech in the global VC landscape. In Q1 2026, the sector accounted for only 4% of global VC funding, compared to 11% in 2025 when it ranked second only to artificial intelligence (AI).

A focus on established firms

In Q1 2026, fintech investors continued to favor more established firms. Mid-stage and late-stage deals took a larger share of the deal count, accounting for 23% of fintech transactions in Q1 2025, up 2 points from 2025.

This trend pushed deal sizes upward. In Q1 2026, the average deal size stood at US$22.5 million, representing a 10.8% increase from US$20.3 million in 2025. The median deal size also increased, rising from US$4.7 million in 2025 to US$6 million in Q1 2026.

This year, the US continues to lead the market, securing about half of global fintech funding and deal count in Q1 2026 at US$6.7 billion and 361 transactions.

The country also dominated in transaction sizes, securing five of the quarter’s six largest fintech deals. These deals involved:

• Kalshi, a prediction market which secured a US$1 billion Series F in March at a US$22 billion valuation;
• Tala, a global financial infrastructure company which raised US$500 million in a Series F in January;
• World Liberty Financial, a Trump-linked cryptocurrency venture which raised a US$500 million round in January;
• Devoted Health, a healthcare company which closed a US$317 million Series F-Prime financing round in January; and
• Rain, an enterprise-grade infrastructure for stablecoin-enabled payments which secured US$250 million in a Series C at the beginning of the year.

Investors remain bullish

Echoing these broader market data, Amias Gerety, partner and head of US at QED Investors, a fintech-focused VC firm, told Crunchbase News that his company has been investing at a slightly slower pace so far in 2026 than in the previous years, citing macroeconomics and geopolitical challenges, and emphasizing a strategic pivot towards “high-conviction companies.”

Despite a more measured approach, Gerety said QED Investors remains bullish on specific growth sectors, particularly the application layer of AI in fintech and stablecoins, and has backed several startups that are harnessing large language models (LLMs).

Looking ahead, Gerety expressed optimism for the fintech sector as a whole this year. Part of the excitement is around the fact that larger companies are enhancing their operations with agentic workflows.

“More and more transformation is moving from the ‘co-pilot’ phase, and we’re moving into the ‘OpenClaw’ phase,” Gerety said. “Reasoning agents will start to actually do all the work that was too tedious and slow to be done manually.”

AI drives VC funding surge

In Q1 2026, VC investors shifted their focus further away from fintech and towards AI. The sector continued to be the dominant investment theme, totaling US$226.2 billion and representing 79% of all VC funding for the quarter.

AI secured some of the period’s largest transactions, including US$122 billion for OpenAI, US$30 billion for Anthropic, US$16 billion for Waymo, and US$7.5 billion for xAI.

While global VC funding surged, deal count declined 15% QoQ, reaching their lowest quarterly total since Q4 2016 with 6,598. Capital concentrated into fewer and larger bets, with early-stage deals trending lower, falling to 64% of total deals, compared to 67% in 2025.

This trend is further evidenced by the dramatic increase in deal sizes. The average deal size surged to US$66.3 million in Q1 2026, marking a near threefold increase from 2025’s US$23.5 million. Meanwhile, the median deal size reached US$4 million in Q1 2026, rising increased 29% from 2025.

Featured image: Edited by Fintech News Switzerland, based on image by freepik via Freepik