In 2023, India's fintech landscape witnessed a notable downturn in funding, experiencing a 63% decline to $2 billion from the previous year's $5.4 billion, as disclosed in a report released on Thursday.
The year 2023 marked the creation of a sole unicorn, InCred, while witnessing 31 acquisitions and two IPOs within the fintech sector. Notably, only five funding rounds exceeding $100 million transpired throughout the year.
Despite the decline, India secured the third position globally in fintech startup funding for 2023, reinforcing its status as a substantial global player, according to insights from Tracxn, a leading market intelligence platform.
The top-performing segments in the Indian fintech sector included alternative lending, payments, and banking-tech. Alternative lending received funding totaling $835 million in 2023, reflecting a decrease from the $2.28 billion recorded in 2022.
The Buy Now, Pay Later (BNPL) segment experienced noteworthy growth, primarily fueled by its widespread adoption within the country, contributing significantly to the sector's overall expansion, as highlighted in the report.
Neha Singh, Co-founder at Tracxn, expressed optimism about the sector's resilience, stating, "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."
Late-stage funding rounds in 2023 secured $1.4 billion, indicating a 56% drop compared to the $3.2 billion raised in 2022. Early-stage rounds and seed-stage rounds faced similar trends, experiencing declines of 73% ($489 million) and 69% ($145 million), respectively, from the previous year's figures.
Leading investors in the fintech space included Peak XV Partners, Y Combinator, and LetsVenture. Two companies, Zaggle and Veefin, announced IPOs in 2023, a decrease from the five companies that went public in 2022.
Bengaluru emerged as the leader in total fintech funding raised in 2023, followed by Mumbai and Jaipur, according to the report.
(With Agency Inputs)
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