In the spirit of the new year, here are some predictions of what will happen in fintech land in 2025:
A virtuous loop between more M&A and IPOs
More M&A was a prediction from last year that certainly has materialized, in the QED portfolio as well as elsewhere. We expect that momentum to continue in 2025 and it will be further bolstered by another emerging (and very welcome!) trend of more fintech IPOs. Just as QED European alumni Klarna recently announced their IPO, we expect more public offerings to be revealed in the coming year, creating a virtuous loop for even more M&A as companies use acquisitions as a tool to accelerate scale either in preparation of or as a consequence of their IPOs.
The visible hand of the government vs. the Invisible hand of the market
More regulation is another 2024 prediction that certainly came to pass, both in Europe and the USA, but we expect this to acquire a new flavor in 2025. Specifically, while there will be a lot of regulatory action in places like the EU, the US looks poised to move to domestic de-regulation (lower taxes, more lenient enforcement, etc.) while moving to more regulation (primarily tariffs) in an international context. The net result of these non-market interventions is that market players will increasingly look to (and try to lobby!) governments to act in their favor. So, expect more lobbying and more reading of the political tea leaves in tech circles!
Crypto spring
Looking at the trajectory of Bitcoin over the last month, this perhaps seems like an obvious prediction, but it is important to note that it will continue to be driven by several secular factors including: i.) more friendly U.S. regulation, ii.) more sanctions and other types of disruptions to international trade and iii.) recent price increases will once again attract masses of retail investors.
Climate tech
This is a secular macro trend that will not abate anytime soon, and especially in Europe, where the EU sees itself as a global regulatory trendsetter, there will continue to be regulatory as well as consumer-driven tailwinds. Add to this the ever-decreasing costs of producing alternative energy, and the table seems set. The one countertrend here would be more tariffs on Chinese-made solar panels slowing down the pace of cost decreases.
European & UK wake-up calls on listings
The IPOs of Klarna, and very likely in the not-too-distant future Revolut, may well take place in the U.S. when they happen. This will surely serve as a ‘bucket of cold water’ for the policymakers in the UK who wish to revive the fortunes of the London Stock Exchange, and London as a listing venue in the face of headwinds that have included decreasing liquidity, more onerous governance, Brexit noise, and sanctions impacting areas such as mining where the London market had a historical niche. Expect some soul-searching, public debates, and hopefully some tangible changes as a result.
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