The wealth tech, insurance tech and lending categories also found backers. However, funding for the lending segment declined compared to previous months.
Funding in the fintech space in January was led by the payments segment that garnered close to 70% of the sectoral investments. Indian fintech companies have collectively raised more than $130 million from investors last month, according to a report published by consulting firm The Digital Fifth.
The wealth tech, insurance tech and lending categories also found backers. However, funding for the lending segment declined compared to previous months. “This could be due to the tightening of norms surrounding lending by the RBI,” analysts at the firm said.
A total of 16 startups in the fintech space raised funds in January. Kunal Shah-led credit card payment and management platform Cred raised $81 million at a post-money valuation of $806 million from a clutch of investors including DST Global and Sequoia Capital. Digit Insurance became the country’s first unicorn in 2021 after existing investors infused Rs 135 crore in the company at a valuation of $1.9 billion.
As more users shift to digital payments, the space is expected to attract sizeable funding in the coming years. The government’ proposal to allocate Rs 1,500 crore to a scheme that seeks to promote digital transactions should further bode well for the payments and the embedded finance space. More than 200 fintech startups are projected to get funded with an expected amount ranging between $3-$4 billion. “This investments will be focused on SME Neobanks, fintech enablers, lending fintech, insurtechs and embedded finance,” the analysts said.
The valuations, they said, will see a “significant jump” on the back of higher digital adoption, availability of bigger funds and increasing interest of banks and finance institutions in the ecosystem.