Clock’s ticking for digital lenders as VC funding plunges 50% in 2025

Venture funding for digital lending startups has fallen by more than half year-on-year in the first eight months of 2025 as rising defaults and regulatory crackdowns on short-duration consumer credit weigh on the sector.

Funding into digital lending startups slumped to $462 million between January and August 2025 from $1.1 billion a year earlier, according to data from market intelligence platform Tracxn.

Only around 50 of the 154 fintech deals reported this year involved digital lenders, the data showed.

The digital lending sector comprises consumer…