Tracxn's India Fintech Report 2023; Peak XV Partners, Y Combinator, and LetsVenture emerged as the leading investors in the sector
FinTech BizNews Service
Mumbai, January 4, 2024:Tracxn, a leading market intelligence platform, has unveiled its Geo Annual India FinTech Report 2023. The report provides valuable information on funding trends, segment performances, and notable developments in the Indian FinTech sector for the year 2023.
Like all other sectors, funding in the FinTech space has also been experiencing a downward trend in India as well as on a global scale. The FinTech sector received funding of $2bn in 2023, a decline of 63% and 76% compared to previous years - $5.4bn raised in 2022 and $8.4bn in 2021, respectively. Despite the challenges posed by factors including increasing borrowing costs and macroeconomic conditions, among others, India has become one of the world's top-funded countries. According to the report, India ranked 3rd globally in 2023 in terms of FinTech startup funding, strengthening its position as a significant player on the global stage.
India has topped the list for digital payments and recorded transactions higher than the top 4 leading countries combined, recording 89.5 million transactions in 2022, with experts predicting the payments landscape in India to reach $100 trillion in transaction numbers by 2030.
The report anticipates that the sector will witness long-term significant growth owing to factors such as the young tech-savvy population, a larger consumer base, its dependency on informal financial and commercial systems, and multiple initiatives by the government towards digitalization.
Alternative Lending, Payments, and BankingTech were the top-performing segments in the Indian FinTech sector. Alternative Lending received funding of $835 million in 2023, down from $2.28bn in 2022. The BNPL segment saw significant growth due to its adoption within the country, which contributed to the growth of the sector. The digital lending space, which increasingly relies on customer data for its product marketing and development, is also likely to grow owing to the government’s recently launched Digital Personal Data Protection Act, which will ensure more transparency and customer trust in the sector.
Banking Tech received funding of $331Mn in 2023, dropping more than 50% compared to the $671Mn funding received in 2022. This segment has substantially benefited from digitalization, and digital banking has seen widespread adoption due to rising internet and mobile device penetration in cities as well as rural areas. Additionally, the Indian government has recently allocated about $16.7bn towards the BharatNet project to increase broadband connectivity within rural areas, which will help widen the reach and potentially attract more investments into the sector.
Speaking on the launch of the report, Neha Singh, Co-Founder at Tracxn, said, “In the dynamic world of FinTech, India's resilience shines through the funding challenges of 2023. Despite a 63% decline, our sector stands strong as the third-highest funded ecosystem globally, affirming its position as a hub of innovation. The implementation of regulatory measures and the government's commitment to digitalization have set the stage for a promising future.”
The FinTech funding landscape experienced a substantial downturn in 2023. Late-stage rounds in 2023 secured $1.4 billion in funding, reflecting a 56% drop compared to the $3.2 billion raised in 2022. Early-stage rounds faced a similar trend, with funding plummeting to $489 million, marking a stark 73% decline from the $1.8 billion raised in 2022. Seed-stage rounds were also not immune to this downward trajectory, securing $145 million, a 69% drop compared to the $474 million raised in the preceding year.
Peak XV Partners, Y Combinator, and LetsVenture were the top investors in the space. In this, We Founder Circle, Y Combinator, and 100X.VC led the seed investments; Accel, Omidyar Network India, and Elevation were prominent investors in early-stage investments, and OP Finnfund Global Impact Fund was the leading late-stage investor in 2023.
The year witnessed five funding rounds surpassing the $100 million mark, showing pockets of resilience in the sector. Notably, Perfios, a real-time credit decision platform, raised $229 million in a Series D round led by Kedaara Capital. Mintifi, an online marketplace for business loans, secured $110 million in a Series D funding round led by Premji Invest.
There were 31 acquisitions, similar to the previous year, with some of the notable ones being TrillionLoans acquired by BharatPe for $36mn, Goals101 acquired by M2P for $30Mn; and Upwards acquired by LendingKart for $12.1Mn.
Two companies, Zaggle and Veefin, announced IPOs in 2023, compared to five companies that went public in 2022.
Bengaluru emerged as the leader in total FinTech funding raised in 2023, followed by Mumbai and Jaipur, reaffirming the significance of these as FinTech hubs in India's startup landscape.
About Tracxn:
Tracxn Technologies Ltd. is a data intelligence platform for private market research, tracking 2.3 million entities through 2500+ feeds categorised across industries, sub-sectors, geographies, and networks globally. It has become one of the leading providers of private company data and ranks among the top five players globally in terms of the number of companies and web domains profiled.
