The Dealflow by Founders Capital - Edition 5

Key News and Trends

Turns out, while everyone’s been worrying about the UK’s growth problem, its fintechs have quietly been sprinting ahead. 

According to the FT, seven out of the top 20 fintech, banking and insurance companies in this year’s FT1000: Europe’s Fastest Growing Companies ranking are based in the UK. It’s a reminder that, despite broader headwinds, the UK remains fertile ground for scaling fintech businesses. Read more here.

Plenty to take in from the Spring Statement: Revised growth, spending realignment, and long-term defence commitments.

Chancellor Rachel Reeves delivered the Spring Statement this week, with the OBR halving the UK’s 2025 growth forecast to just 1%. The government announced cuts to welfare spending and broader public sector restraint, while reaffirming its commitment to raise defence spending to 2.5% of GDP by 2027 - a move it describes as the largest sustained increase since the Cold War. Read more here.

From peer-to-peer piracy to immersive concerts, Napster just closed another unexpected chapter.

Napster, the pioneering music-sharing service from the late 1990s, has been acquired by 3D technology company Infinite Reality for $207 million. Infinite Reality plans to transform Napster into a social music platform, creating virtual 3D spaces for concerts, listening parties, and merchandise sales. This initiative aims to enhance artist-fan interactions and open new revenue streams in the evolving digital landscape. Read more here.

OpenAI’s next big leap isn’t just technical - revenue’s rising, valuation’s soaring, and a $40B raise could make venture history.

OpenAI is reportedly close to securing a $40 billion funding round led by SoftBank, valuing the company at $300 billion - in what would be the largest venture deal ever. The AI giant expects to generate $12.7 billion in revenue in 2025, more than triple last year’s number, but doesn’t anticipate being cash-flow positive until 2029 due to heavy investment in chips, data centres, and top-tier talent. Read more here.

Founder’s Take: In a Cautious Market, UK Fintech Still Delivers

One structural shift helping to drive momentum in UK fintech: rising interest rates, which have notably strengthened the unit economics for neobanks and digital lenders. These firms are now better positioned to monetise deposits and operate on more sustainable margins - a reversal from the ultra-low-rate environment of recent years.

At the same time, challenger and specialist banks are stepping into a vacuum left by traditional institutions. With high street banks pulling back on SME lending due to tighter regulation, these newer players now account for 60% of all SME lending in the UK, according to the British Business Bank.

But growth remains a key constraint. The FT notes it's one of the biggest challenges facing the UK economy - and venture investors are responding. With exit routes limited and liquidity still tight, the bar for funding has risen. As PitchBook’s Venture Monitor puts it: quality is still getting funded.

For founders, the message is clear: resilience isn’t just about weathering the funding climate - it’s about being in the right structural position when conditions shift.

Top Venture Deals

Mercury – $300M Series C (Sequoia Capital)

• Fintech banking startup Mercury has more than doubled its valuation to $3.5 billion. Mercury helps early-stage startups manage their finances. Sequoia led the round, and will get a board seat. Read more here.

Island – $250M Series E (Coatue)

• Dallas-based provider of secure enterprise browsers, Island, raised $250 million in a Series E funding round led by Coatue, achieving a post-money valuation of $4.8 billion. Read more here.

Fleetio –  $450M Series D  (Goldman Sachs Alternatives, Elephant VC)

• Fleetio, a software platform that helps companies manage vehicle fleets, raised $450 million in Series D funding. As part of the deal, it acquired Auto Integrate, a tool that connects fleet operators with repair shops. The move creates a more seamless experience for businesses managing vehicle maintenance. Read more here.

Upcoming Public Offerings

Terrestrial Energy 

• Terrestrial Energy, a developer of small modular reactors (SMRs) using molten salt technology, is going public via a $925 million SPAC merger with HCM II Acquisition Corp. The combined company will trade on Nasdaq under the ticker IMSR. Read more here.

eToro

• London-based trading platform eToro has filed to go public on the Nasdaq under the ticker ETOR, with expectations to raise up to $750 million, per Renaissance Capital. The company reported $192 million in net income on $12.64 billion in revenue in 2024 - a strong rebound after a previously scrapped SPAC attempt in 2021. Read more here.

See you in the next edition,
Sam Scott and the Founders Capital Team