BENGALURU: Funding in the Indian fintech sector has been experiencing a downward trend as the sector received only USD 2 billion in funding in 2023, a fall of 63 per cent and 76 per cent compared to USD 5.4 billion raised in 2022 and USD 8.4 billion in 2021.
According to Tracxn’s India Fintech Report 2023, late-stage rounds in 2023 secured USD 1.4 billion in funding, a 56 per cent drop compared to USD 3.2 billion raised in 2022. Early-stage rounds faced a similar trend, with funding plummeting to USD 489 million, a 73 per cent decline from the USD 1.8 billion raised in 2022. Seed-stage rounds too witnessed a downward trajectory, as it secured USD 145 million, a 69 per cent drop compared to USD 474 million raised in the preceding year.
Despite the challenges posed by factors including increasing borrowing costs and macroeconomic conditions, according to the report, India ranked third globally in 2023 in terms of fintech start-up funding. Alternative lending, payments and Bankingtech were the top-performing segments in the fintech sector, as alternative lending received funding of USD 835 million in 2023, down from USD 2.28 billion in 2022. The BNPL segment saw significant growth due to its adoption within the country.
The year witnessed five funding rounds surpassing the USD 100 million mark, and there were 31 acquisitions, similar to the previous year. 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.
Neha Singh, co-founder, Tracxn, said, “Despite a 63 per cent decline, the fintech sector stands strong as the third-highest funded ecosystem globally, affirming its position as a hub of innovation.” Meanwhile, nasscom in collaboration with Zinnov released the Indian tech start-up ecosystem report on Thursday. The report said over 950 tech start-ups were founded in 2023.
The cumulative funding for tech start-ups from 2019 to 2023 has exceeded USD 70 billion. Despite the news on layoffs dominating the start-up sector in 2023, as per the survey of over 100 start-up founders, over 65 per cent of them have done moderate hiring in 2023. Investments in DeepTech will continue an upward trend in 2024.