Surge in Funding for Indian FinTech Startups

Indian financial technology (fintech) startups have experienced a significant increase in funding from July to September 2023, according to a report by Tracxn. The report details a 68% rise in funding compared to the preceding quarter, April to June, with a total of $436 million invested. This jump is primarily attributed to the heightened funding of late-stage startups like Perfios, which secured $229 million in the last month. However, this quarter’s investment still falls short of the $967 million raised during the same period in 2022.

The Fintech Landscape

Despite the broader tech sector seeing a relatively low influx of funds in this quarter, fintech startups are experiencing a revitalizing surge. Investors are demonstrating optimism towards the growth of digital payments in the country, leading to an uptick in funding.

Alternative lending witnessed the most significant quarter-on-quarter growth of 259% within the fintech sector, reaching a funding total of $305 million. This growth is largely due to the Buy Now Pay Later (BNPL) sector’s substantial growth and adoption within the country. Other segments that raised more funding this quarter include startups providing banking tech and regulatory tech services.

Top Funding Rounds

Among the startups that received funding, Perfios topped the list, followed by edu-loans startup Auxilo, which raised $57.4 million. Banking tech startup Credgenics had the third-highest funding round, securing $50 million.

However, not all segments of the startup ecosystem fared well. Seed-stage startups such as Equitylist and Trential experienced a significant decline in funding, marking an 89% drop compared to the previous quarter.

Key Players and Locations

The report revealed a decrease in the number of funding rounds to 22 from 35 in the previous quarter. The top investors this quarter were Peak XV Partners (formerly Sequoia Capital India), Y Combinator, and Accel Partners.

Bengaluru emerged as the leading city for fintech startup funding, followed by Mumbai and Noida. However, this quarter did not witness the emergence of any new unicorns, companies valued above $1 billion.