India’s FinTech Q3 2023 funding records a 68% Surge from Q2 2023: Tracxn Geo Quarterly India FinTech Report
Highlights:
- Total funding received by the FinTech sector increased by 68% in Q3 2023, compared to Q2
- India has become the fourth-highest-funded startup ecosystem across the globe
- Only one $100 million+ funding round has taken place in Q3 2023 so far
- No new unicorns were created in Q3 2023, while it saw 7 acquisitions and 2 IPOs
- Bengaluru led the funding in the Indian FinTech space, followed by Mumbai and Noida
- Peak XV Partners, Y Combinator, and Accel emerged as the leading investors in the sector
Tracxn, a leading market intelligence platform, has unveiled its Geo Quarterly India FinTech Report- Q3 2023. The report provides valuable information on funding trends, sector performances, and notable developments in the Indian FinTech sector for the third quarter of 2023.
India’s FinTech landscape, which witnessed a surge in Q4 2021 followed by a gradual decline, experienced a notable upswing in Q3 2023. Despite the challenges posed by factors like rising borrowing costs and recession in developed markets, the sector observed a 68% uptick in funding compared to Q2 2023. According to the report, India ranked 4th globally in terms of FinTech startup funding, underscoring its position as a significant player on the global stage.
The report highlights that the sector witnessed significant growth in specific segments with Alternative Lending, Banking Tech, and RegTech emerging as top performers in H1 2023.
Alternative Lending, in particular, clocked a remarkable growth of 259% compared to Q2 2023, reaching $305 million in funding. The BNPL sector which has seen significant growth and adoption within the country contributed to the growth in this sector.
Banking Tech received funding of $282M in Q3 2023, which is a growth of 396% compared to Q2 2023 and 81% compared to Q3 2022 benefitting substantially from the digital solutions in this sector and digital banking has seen widespread adoption due to rising internet and mobile device penetration in cities and rural areas. Also, The government of India’s recent allocation of $16.7B towards the BharatNet project to increase broadband connectivity within rural areas will help widen the reach and potentially bring about more investments into the sector.
RegTech received funding of $229M in Q3 2023, which is a growth of 100% compared to Q2 2023. Payments, Embedded Finance and Internet First Insurance Platforms saw a drop of 91%, 99% and 64% respectively in Q3 compared to the funds raised in Q2 2023
Q3 2023 also witnessed significant funding in late-stage rounds, with Perfios, a real-time credit-decisioning platform, securing a notable $229 million in a series D round led by Kedaara Capital.
Speaking on the launch of their report, Neha Singh, Co-Founder, Tracxn said, “In a time of global economic uncertainty, India’s FinTech sector has demonstrated exceptional resilience and growth. Tracxn’s Q3 2023 report sheds light on a pivotal period, where our FinTech startups exhibited a remarkable 68% increase in funding compared to Q2 2023. This surge reflects the industry’s dynamism and innovation, positioning India as a leading global FinTech player”
The quarter saw seven acquisitions, a slight drop of 12% from eight acquisitions in Q3 2022. Notable acquisitions included Fego, an open banking platform, which was acquired by Perfios, Bridge2capital, a supply chain financing platform by IIFL Finance and FundsIndia, an investment platform for mutual funds, by WestBridge Capital.
Two companies, Zaggle and Veefin went public in Q3 2023, showcasing the growing maturity of the Indian FinTech ecosystem.
Bengaluru emerged as the leader in total fintech funding raised during Q3 2023, followed closely by Mumbai and Noida, reaffirming the significance of these as Fintech hubs in India’s startup landscape.
Peak XV Partners, Y Combinator and Accel were the top investors in the space. Y Combinator, 9Unicorns and Upsparks Capital led the seed investments, while Accel, Elevation and Lightspeed Venture Partners were prominent in early-stage investments.
