PayPal Ventures has co-led a Series A funding round in Formance, an Open Source financial infrastructure provider, demonstrating its continued appetite for fintech investment in 2025.

Formance announced the closure of the round yesterday, revealing it raised $21m from a group of investors led by PayPal Ventures and Portage Ventures, a global fintech-focused investment firm.

The company plans to use the funding to expand its operations in providing Open Source solutions across various sectors including fintechs and financial institutions. Its existing clients include Doctolib, Liberis, Booksy and Btech.

“This new funding will fuel Formance’s expansion across the US and Europe and accelerate its vision of transforming its Open Source Ledger into a full-scale platform for building and managing sophisticated financial features,” said Anne-Sybille Pradelles, Formance Co-Founder.

In a separate announcement, PayPal Ventures explained the rationale behind its investment. PayPal’s investment arm appears to have identified an opportunity in the growth of embedded finance solutions, driving demand for vertical software-as-a-service (SaaS) platforms which offer services across the financial services sector.

It has also singled out the expansion of fintechs into ‘super apps’ – a term which may remind some readers of Elon Musk’s plans to incorporate payments into X to create an ‘everything app’.

Meanwhile, PayPal Ventures is also confident that demand for services provided by the likes of New York City-based Formance will also come from financial institutions looking to rise to the challenge of neobanks and fintechs.

“While the ecosystem has managed to deliver by layering on legacy and home-grown solutions, increasing market complexity and growing customer expectations have exposed significant structural inefficiencies,” PayPal Ventures’ statement read.

“These constraints result in tangible business impact, including delayed product rollouts, missed revenue opportunities, and escalating operational costs. Furthermore, companies grapple with ensuring scalability while maintaining regulatory compliance.

“At PayPal Ventures, we believe that future-proof financial infrastructure is fundamental to unlocking the next wave of growth and innovation across commerce and financial services.”

PayPal has been keeping track of various developments across financial services and technology, and the convergence between them, over the past year. The investment in Formance marks its first of 2025 and suggests that this year could be just as active as 2024.

Last year saw PayPal Ventures invest in fintech infrastructure company Prometeo, digital assets transfers platform Mesh, generative conversational AI platform Rasa, cards-as-a-service and payment app provider Pliant and onchain risk management platform Chain Labs.