Fintech
FinTech Sees Funding Decline in First Half of 2024: Tracxn Report
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According to a recent report by Traxcn, the Indian fintech sector has seen a decline in funding activities in 2024. The report titled “Tracxn FinTech Report” states that the sector has received funding of USD 795 million in 2024, marking a decline of 11% and 57% from USD 896.7 million in the second half of 2023 and USD 1.93 billion in the first half of 2023, respectively.
The Citywise breakdown showed that funding in Bengaluru led the race, followed by Mumbai and Pune. Major investors in the space emerged as Peak XV Partners, Y Combinator and LetsVentuure.
According to the report titled “Geo Annual India FinTech Report H1 2024 on funding trends”, India’s fintech ecosystem has ranked in the top three alongside the US and UK. Despite the ranking, the numbers show a significant decline. Experts’ opinions on the current funding winter have had their effect, along with geopolitical uncertainties that are further influencing the decline.
The report also stated that a quarterly analysis revealed that the sector recorded USD 582 million in the first quarter, marking a decline of 55.6 percent from USD 1.31 billion in the first quarter of 2023. However, the second quarter recorded a paltry USD 214 million, a sharp decline of 65 percent from the second quarter of 2023.
The most significant funding rounds were Avanse’s $120 million Series C and Credit Saison’s $144 million Series D.
RegTech, BankTech and Alternative lending were the top performing segments, with the lending space securing USD 646 million. The segment contributed 81 percent of total financing in the FinTech sector in India.
However, RegTech saw a 50 percent decline, securing USD 118 million compared to USD 238 million in H2 2023. Banking Technology sector raked in USD 115 million, recording a 65 percent decline compared to USD 328 million in H2 2023.
Neha Singh, co-founder of Tracxn, said that despite the slowdown in funding globally, the Indian FinTech ecosystem is showing agility and adaptability, supported by strong economic fundamentals, and the slowdown in funding reflects the need for a cautious outlook and strategic planning among startups and investors.
“Our FinTech sector remains dynamic and we are optimistic that a conducive policy environment and technological advancements will create new opportunities for growth and innovation in the near future,” said Neha Singh.
With Peak XV Partners, Y Combinator and LetsVenture as the largest investors ever in FinTech funding, Venture Catalysts, Y Combinator and BeeNext emerged as leaders in early stage investments. Peak XV, Sorin and Quona dominated the early stage while Epiq Capital Advisors, UC-RNT Fund and Amara Partners led the late stage funding in 2024.
The only unicorn to emerge from H1 2024 was Perfios. With the major wave of IPOs going on in the country, the FinTech sector has seen five companies announce IPOs in H1 2024.