Fintech funding falls 59% to $795 mn in H1, 2024

The sector garnered $896.7 million in H2, 2023, according to market intelligence platform Tracxn.
Image used for representation.
Image used for representation.

BENGALURU: In the first half of this year (January-June 2024), the fintech sector witnessed a declining trend in funding as they could manage to raise only $795 million, a 59% fall compared to $1.93 billion raised in the same period last year.

The sector garnered $896.7 million in H2, 2023, according to market intelligence platform Tracxn. In its semi-annual report, the firm said the funding in late-stage rounds stood at $551 million, a 63% decline from the $1.5 billion the sector raised in H1, 2023.

Neha Singh, co-founder at Tracxn, said, “The slowdown in funding reflects the need for a cautious outlook and strategic planning among start-ups and investors. Our Fintech sector remains dynamic, and we are optimistic that a supportive policy environment and technological advancements will create new opportunities for growth and innovation in the near future.”

The Reserve Bank of India (RBI) recently came up with the Framework for Self-Regulatory Organisation for FinTechs, and this is to promote self-regulation in the industry to adhere to government rules. “This can potentially help bring trust and stability to the sector and highlight the importance of Fintech start-ups in the country’s financial system,” the report said.

The funding in both the seed-stage and early-stage too declined in the first half of this year. About $179 million was raised in early-stage rounds, which is a 50% decline from $361 million raised in H1 2023.

The first quarter of 2024 (January-March) has been the major contributor to funding so far, as the quarter witnessed $582 million in fundraising, and Q2, 2024 saw only $214 million in funding. Alternative Lending, RegTech, and Banking Tech were the top-performing sectors in this space, and Perfios is the only start-up that turned unicorn in this space. With 37% of total funding (about $297 million), Bengaluru leads the space in terms of total funds raised in this period, followed by Mumbai ($231 mn) and Pune ($106 mn).

H1 2024 witnessed six acquisitions, which is again a 66% decline compared to 18 acquisitions in H1 of 2023, and a total of five companies went public in the first half year of 2024. No IPOs were observed in the same period last year.

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