BENGALURU: Fintech start-ups in India have been able to attract only $1.2 billion in investments, a 55% decline, in the first quarter of 2023 compared to $2.6 billion raised in Q1 2022, as raising inflation and interest rates have impacted the investments.
According to the Tracxn report, the fintech companies in India receive the second highest funding after their peers in the US, but the funding is still declining compared to previous years.
The fintech space recorded late-stage investments of $977 million in the first three months of 2023, a drop of 44% from Q1 2022. Early-stage funding during the quarter was $177 million, down 76% from Q1 2022. Seed-stage funding of $30.2 million was observed during this quarter, a fall of 74% from the year-ago period.
The report says it was an uneventful quarter in terms of IPOs and unicorns. No companies from the fintech space went public in Q1 2023, and there were no new entrants in the unicorn club. However, there was a slight uptick in acquisitions. The sector witnessed 11 acquisitions in Q1 2023, as against six acquisitions in Q4 of 2022.
The quarter also saw six $100M+ funding rounds.
Companies such as PhonePe, Mintify, Insurance Dekho and KreditBee have managed to raise funds above $100 million. in this quarter. Phonepe has raised a total of $650 million in multiple Series D rounds in Q1 of 2023 valuing the company at $12 billion.
Among cities, fintech firms in Bengaluru took the lead, raising $796 million in the first quarter of 2023. This was followed by Mumbai and Gurugram, which raised $222 million and $151 million respectively, during the quarter.
Sequoia Capital, AngelList and Y Combinator are the most active investors in India's fintech space. Y Combinator, LetsVenture, and Premji Invest were the top investors in Q1 2023. Y Combinator, 100X.VC, and LetsVenture were the top seed-stage investors.