Last year saw only 144 funding rounds in fintechs, a sharp decline from the 504 funding rounds the sector had seen in 2022.
Financial technology startups raised a total of $2 billion in funding last year, marking a 63% decline from the $5.4 billion they had raised in the year before that, amid a wider slowdown in funding across sectors. At the peak of the funding boom in 2021, fintechs had raised $8.4 billion in funding, data from Tracxn showed.
However, Indian fintech sector still received the third-highest funding globally in 2023. “Indian fintech sector has witnessed substantial growth and traction in becoming one of the world’s top-funded ecosystems and is also the fourth highest-funded startup ecosystem in the fintech sector globally based on funding to date,” the report said.
Last year saw only 144 funding rounds in fintechs, a sharp decline from the 504 funding rounds the sector had seen in 2022. Among the top performing segments within fintech were alternative lending, payments and banking tech with alternative lending firms receiving the sector’s highest funding of $835 million in 2023. This is still 63% lower than the funding received by these firms in 2022.
The strong growth and customer adoption of buy now pay later services have led much of the growth in the alternative lending space, while the Digital Personal Data Protection Act is expected to make the sector more transparent and increase consumer trust.
Startups in the payments segment received funding of $753 million in 2023, while those offering banking tech services raised $331 million from investors. Funding in both these segments were sharply lower than 2022.
In 2023, early-stage and seed-stage funding rounds saw sharper decline, compared to late-stage rounds. While late-stage rounds saw funding drop 56% to $1.4 billion, that in early-stage rounds fell 73% to $489 million and in seed-stage rounds fell 69% to $145 million, the data showed.
Only five $100 million+ funding rounds were seen among fintechs last year, which included PhonePe, Perfios, InsuranceDekho, KreditBee and Mintifi. Among these, PhonePe raised the largest round of $623 million, followed by Perfios at $229 million and InsuranceDekho at $150 million.
The year saw only one unicorn – InCred – compared to five unicorns in 2022. Two fintechs – Zaggle and Veefin – launched their initial public offerings last year, while in the year before that, five companies had gone public.
Bengaluru led the funding in the fintech sector in India last year, followed by Mumbai and Jaipur. Peak XV Partners (formerly Sequoia Capital India), Y Combinator, and LetsVenture were the overall top investors in this space.
https://www.financialexpress.com/business/industry-fintech-funding-falls-63-in-2023-2-billion-raised-compared-to-5-4-billion-in-2022-3355849/
