Financial technology startups in the country saw an uptick in funding in July-September over the preceding quarter, mainly due to an increase in funding in late-stage startups such as Perfios, which raised $229 million last month, according to a report by Tracxn.
The July-September quarter saw $436 million in funding in fintech startups, marking a 68% rise over April-June, but still remained lower than the $967 million raised in the corresponding quarter last year.
Funding across startup segments has witnessed a steady decline since early last year due high interest rates and recessionary fears in developed markets, which was preceded by an exceptional year of investments in 2021.
Tracxn data showed that while funding in the broader tech sector remained low in the July-September quarter, fintech startups are showing an uptick as investors are optimistic about the country’s digital payments growth.
Among the top segments in the fintech sector, alternative lending has clocked the highest quarter-on-quarter growth of 259%, reaching $305 million in funding. “The BNPL sector which has seen significant growth and adoption within the country contributed to the growth in this sector,” the report said.
Besides alternative lending, startups providing banking tech services and regulatory tech services also raised higher funding this quarter, compared to the previous one.
Banking tech startup Credgenics saw the third-highest funding round at $50 million, preceded by edu-loans startup Auxilo that had raised $57.4 million and Perfios with the highest funding.
While late-stage and early-stage startups recorded a rise in funding this quarter, seed-stage startups did not fare well. Funding in seed-stage startups such as Equitylist and Trential came in at $8 million in July-September, marking a 89% drop compared to the previous quarter.
The number of funding rounds this quarter saw was also lower at 22 compared to the 35 rounds in April-June, the report said. The top investors in this quarter were Peak XV Partners (formerly Sequoia Capital India), Y Combinator and Accel Partners.
As for cities, Bengaluru leads the funding in fintech startups, followed by Mumbai and Noida, the report said. The quarter also did not see the addition of any new unicorns or companies valued above $1 billion.