‘Fintech stays among top-funded sectors despite investment dip’
- ByStartupStory | January 20, 2023
Fintech funding in India practically fell in half in 2022 as a result of a fall in late-stage funding activities during the course of the year. According to a recent assessment, it continued to be one of the most funded areas.
The report by market intelligence platform Tracxn said, “Fintech startups in India raised a total of $5.65 billion in 390 rounds in 2022, a plunge of 47% in terms of funding amount and 29% in the number of rounds, when compared with 2021.”
Fintech firms received less funding than their counterparts in the business software and business applications sectors. Enterprise applications, which includes businesses in enterprise software, software-as-a-service (SaaS), and HR tech platforms, raised $7.2 billion over 644 deals in 2022, according to data that was accessible as of November 30.
The volume of funding rounds worth $100 million or more also decreased by 50% in 2022, from roughly 26 the year before. Because of this, just four fintech businesses might reach a valuation of $1 billion, compared to the 13 new unicorns that entered the market in 2021.
A fundraising winter brought on by inflationary pressures and macroeconomic difficulties resulted in fewer unicorns being created in 2018 compared to 2021; only 23 firms across all industries were able to reach the value, as opposed to 44 that might become unicorns in 2021.
With nearly 20 investments in fintech companies made last year, Y Combinator, Tiger Global Management, and Lets Venture were the most active investors in the sector. The market data platform anticipates smooth sailing for fintech’s growth over the long term, especially in light of the rising use of fintech solutions due to more digitization since the COVID-19 pandemic and an increase in digital payments and lending services in Tier II cities and beyond.
“A large unbanked population and rising mobile phone usage are some of the factors that will aid the sector’s growth in the long run,” the report noted.
Fintech, SaaS, Cleantech, and Consumer Tech will all continue to be important to investors in the future, predicts Blume Ventures, one of the top active VCs in India in 2022. The Walmart-backed PhonePe which recently completed its separation from e-commerce giant Flipkart, raised $350 million from US private equity firm General Atlantic at a pre-money valuation at $12 million, making it the most valuable homegrown fintech startup and one of the most closely watched deals in the space in 2023.
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