While the year began with a modest rebound in startup funding, the momentum hasn’t lasted long. Fintech startups in India raised $1.6 billion in the first nine months of the year, marking a 17% decrease from the same period last year. Data from Tracxn showed that this year’s fintech funding is the lowest in the last six years.
The drop is in line with the broader tech funding scenario, where investments fell 23% year-on-year to $7.7 billion between January and September this year.
Fintech funding rounds witness a decline
The number of fintech funding rounds also fell by 40% to 170 deals this year, with the top deals being a $202 million Series F round raised by IPO-bound discount broking platform Groww, a $170 million round raised by affordable housing finance company Weaver Services, and a $75 million Series G round raised by CRED.
While funding in seed-stage rounds declined nearly 40% and late-stage rounds fell 23% year-on-year, early-stage deals offered some optimism. Between January and Sept, early-stage deals recorded a modest 8% rise to $598 million. Some of these deals include a $41 million Series A raised by Saarathi Finance in May, UPI payments startup Popclub’s $30 million round by Razorpay in June, and another $30 million round raised by Easebuzz in April.
What did co-founder of Tracxn say?
“While overall investments have seen a dip, the consistent activity at the early stage and the emergence of new unicorns highlight sustained investor confidence in the sector’s long-term potential,” said Neha Singh, co-founder of Tracxn.
Between January and September, the fintech ecosystem saw two $100 million+ funding rounds (Groww, Weaver Services) compared to three such rounds in the previous year. In terms of exits, 23 acquisitions took place during this period, compared to 22 last year. The largest deal was Resulticks’ $2 billion acquisition by Diginex, followed by Fisdom’s $150 million acquisition by Groww.
In terms of market activity, the sector recorded one IPO in the first nine months, compared to seven last year. Seshaasai Technologies was the only company to go public so far this year. However, more fintech startups, including Groww and Pine Labs, have filed their draft papers to go public soon.
Venture Catalysts, Antler, and Fundamentum were the top seed-stage investors, while Peak XV Partners, Bessemer Venture Partners, and GMO Venture Partners led early-stage investments, and SoftBank Vision Fund, Sofina, and Lathe Investment were the top late-stage investors.