Indian fintech sector sees bleak first half of 2023 as funding drops 67%

economictimes.indiatimes.com:

Funding in the Indian fintech sector dropped 67% on year during the first half of 2023, an industry report released on Monday by market intelligence platform Tracxn said. In the first six months of 2023, Indian fintechs raised $1.4 billion, a significant drop from $4.3 billion in the same period last year. This trend has continued from the second half of 2022 when funding in the space hovered around $1.5 billion only.

Despite the funding winter, India retained its spot as the third most attractive destination for venture funding after the US and the UK, the report said.Early stage investments saw a steep 81% decline from the first half of 2022, while seed stage funding fell 70%, Tracxn’s semi-annual funding report for the Indian fintech sector added. However, for the first time in the last three years, late stage funding dominated the scene with almost $1.1 billion being poured in. Interestingly, the first three months of the current year saw fintechs raising almost $1.2 billion worth of funding, more than 80% of the funding for the entire six months period.

The latest numbers reveal how funding is drying up almost on a month-on-month basis for Indian startups this year. Among the sectors that attracted the maximum funding are payments, alternative lending and digital insurance companies. Crypto as a sector got only $5.6 million during the first six months of 2023.

In keeping with global trends, 55% of the funding went to payment players. In the US, too, payment startups were attracting the maximum venture dollars, the report said. Among payment apps, PhonePe raised $750 million at a valuation of around $12 billion, making it one of the 10 most valued payment startups in the world.