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Indian fintech startups managed to scoop up $1.4 billion in the first half of 2023.

Indian fintech startups managed to scoop up $1.4 billion in the first half of 2023.

Bumpy Ride for Indian Fintech! Funding Drops 67% in First Half of 2023

October 12, 2023
in Fintech
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The arena of fintech startups is facing another crucial test. It has sent the financial world into another frenzy. Recently, Tracxn, a SaaS-based market intelligence platform, shared a report stating that funding in the Indian fintech sector witnessed a massive decline of 67% during the first half of 2023! A hit nobody expected.

According to the report, Indian fintech startups managed to scoop up $1.4 billion in the first half of 2023. It might sound like a lot, but it’s actually a huge drop from the $4.3 billion raised in the first half of 2022. However, the funding in fintech startups in the first half of 2023 saw a decline of only 6% compared to the second half of 2022. 

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Even though funding for fintech startups has taken a bit of a nosedive, India is still holding it down as the third-biggest fintech player worldwide, trailing just behind the US and the UK. Also, did you know the fintech sector here in India has managed to scoop up the most funding when you stack it up against all the other industries?

So, what’s the deal with this sudden drop, you might be wondering?

The reason behind why things went south is pretty straightforward. It can be chalked to a downward trend in early-stage investment. Those early-stage investments plunged 81% in the first half of 2022 and 68% in the latter part of the year. 

How’s the fintech industry looking? 

All the figures mentioned above clearly highlight the change in funding sentiment. What might those reasons be? One is the current macroeconomic conditions; second, investors are now focusing on more profitable business models. 

On the bright side, late-stage funding stole the spotlight this time, with a whopping $1.1 billion flowing in – a first in three years. Here’s an interesting twist: during the first three months of this year, Indian fintech managed to snag $1.2 billion in funding, over 80% of what they got for the six months. 

Though the latest numbers tell a story of drying funds for Indian startups in 2023, some of the biggest players in the payments segment were the top-performing segments in the fintech sector. The big winners in the funding game include payments, alternative lending, and digital insurance companies. Payment players raked in a hefty 55% of the funds – a trend seen across the pond in the US too!

Seven super impressive funding rounds happened in the first half of 2023. Each funding round closed at an incredible amount of over $100 million. And companies like PhonePe, Mintifi, InsuranceDekho, and KreditBee all got a piece of that funding pie. For about $36 million, BharatPe acquired Trillion Loans, while Lendingkart made headlines with its $12 million acquisition of Upwards.

The leader in fintech, Bengaluru, grabbed the event by investing about $950 million in its fintech projects. Mumbai comes in second with a respectable $218 million. Jaipur also splashes in the major leagues with a cool $150 million.

Conclusion

This funding slump might actually be the kick the fintech sector needed. It’s like a wake-up call for startups to get creative, focus on long-term growth, and tackle problems head-on. As the fintech sector adjusts to these twists, we’re in for a nail-biting few months to see if this downturn is a game-changer or just a little blip in the incredible journey of fintech innovation.

Tags: BharatPeFintechfintech fundingFintech IndustryFintech StartupInsuranceDekhoKreditBeeLendingkartMintifiPhonePe

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