Domestic startups face funding challenges amidst sectoral turbulence; ‘Alternative Lending‘ dominates investment landscape, says Tracxn report.
India’s fintech sector experienced a significant setback in the first quarter of 2024, with funding plunging by 57% amidst the fallout from the Paytm fiasco. According to a report by market intelligence platform Tracxn, domestic fintech startups raised a total of $551 million between January and March 2024, a stark decline from the $1.3 billion raised during the same period in 2023.
Seed-stage funding for fintech startups amounted to $9.9 million, early-stage funding reached $147 million, and late-stage funding stood at $80.1 million in Q1 2024.
Notably, the ‘Alternative Lending’ segment dominated the funding landscape, accounting for nearly 89% of total investments in the first three months of 2024. ‘Alternative Lending’ firms secured $491 million during this period, with Credit Saison emerging as the top-funded company in the segment, raising $144 million in a Series D round.
Meanwhile, the RegTech segment secured $107 million in funding, and Banking Tech received $85.8 million. Perfios, a RegTech firm, raised $80 million from Teachers’ Venture Growth, propelling it into the unicorn club with a valuation exceeding $1 billion.
India ranked third globally in terms of fintech funding in Q1 2024, reflecting sustained investor interest in the sector’s potential to drive economic growth. Neha Singh, Co-Founder of Tracxn, emphasized the sector’s innovative capabilities and its role in advancing India’s economic expansion.
Investors directed the bulk of funding to fintech companies based in Bengaluru, with $247 million invested in Q1, followed by Mumbai ($194 million) and Hyderabad ($75 million).
Top investors in the sector included Peak XV Partners, Y Combinator, and LetsVenture.
The quarter also witnessed four acquisitions in the fintech space, including Difenz‘s acquisition of Signzy for $5 million. Other notable acquisitions included Cred‘s acquisition of Kuvera, Just Pay‘s acquisition of LotusPay, and DMI Finance‘s acquisition of ZestMoney, although the financial details of these transactions were undisclosed.
