Despite a 33% year-over-year drop to USD 1.9 billion in 2024, India placed third internationally in terms of the funding received in the fintech sector, according to a study released on Monday by market intelligence firm Tracxn.
According to Tracxn's Annual India Fintech Report 2024, the industry saw a drop in capital due to geopolitical concerns and a general downturn in demand.
"With a total of USD 1.9 billion raised in 2024, the fintech industry saw a significant drop in funding. This is a 33% drop from the USD 2.8 billion that was obtained in 2023. Only the US and the UK have more funding than the Indian fintech sector, which has cemented its place among the top three internationally in 2024, according to the report.
In 2022, the industry raised USD 5.6 billion.
The industry received USD 805, the most funding of 2024, in the third quarter, which was 61% more than the previous year (Y-o-Y).
Furthermore, August proved to be the most successful month for funding, adding USD 434 million to the annual total, while 59% of the money in 2024 was obtained in the second half of the year, suggesting a late-year resurgence.
"India's fintech ecosystem continues to show exceptional resilience and adaptation in spite of the global funding downturn. Two new unicorns and a record eight initial public offerings (IPOs) in 2024 demonstrate the industry's resilience, according to Tracxn, co-founder Neha Singh.
"As we look to the future, the sector is poised to build on these successes, driving financial inclusion and innovation while solidifying its position as a global leader in the fintech space," Singh stated.
In 2024, two unicorns emerged, Money View and Perfios, compared to a single unicorn in 2023, despite the fact that only three USD 100 million-plus fundraising rounds were reported, a 50% decrease from six in 2023.
Digital lending solutions dominated the funding received, accounting for 64% of the total funding raised this year.
In 2024, DMI Finance raised USD 334 million in investment headed by MUFG, while Credit Saison raised USD 144 million.
The late-stage rounds are the most impacted.
Late-stage capital totaled USD 1.1 billion, a 42 percent decrease from the USD 1.9 billion raised in 2023, according to the study.
In 2022, late-stage funding totaled USD 3.1 billion.
Early-stage fundraising rounds saw a 16% year-on-year dip to USD 562 million in 2024 from USD 667 million raised in 2023, and a 70% drop from USD 1.9 billion in 2022.
Seed-stage funding fell 19% year on year to USD 178 million in 2024, from USD 219 million in 2023, and 66% from USD 529 million in 2022.
"Mergers and acquisition activity decreased slightly, with 26 acquisitions recorded in 2024, down 16 percent from 31 in 2023. Notable purchases include Happiest Minds' USD 94.5 million acquisition of PureSoftware and 360 One's USD 44 million acquisition of ET Money, according to the report.
The sector saw eight IPOs in 2024, a 300 percent growth over the two IPOs in 2023.
Bengaluru remained the leading hub for fintech funding in 2024, followed by Mumbai and Delhi. Peak XV Partners, LetsVenture, and Y Combinator emerged as the top investors overall.
Seed funding were led by Venture Catalysts, Y Combinator, and Antler, with Elevation Capital, GMO Venture Partners, and Peak XV Partners dominating early-stage investing, according to the report.
Creaegis, The Rise Fund, and Amara Partners led the way with late-stage investments.
The Investment Tech industry received USD 320 million in funding in 2024, an 11% decrease from the USD 358 million raised in 2023.
However, the Payments segment had a steeper reduction, drawing USD 194 million, a 77% decrease from USD 836 million in 2023 and an 81% decrease from USD 1.01 billion in 2022.In 2022, the sector raised USD 5.6 billion.
The industry received the most funding in 2024, USD 805, in the third quarter, which was 61% higher year on year (YoY).
