India's fintech startup ecosystem now ranks fourth in the world for funding
India became the fourth-highest financed fintech startup ecosystem globally in the third quarter due to a 68 percent increase in funding for the country's fintech sector from the second quarter. Overall, the country is the third largest startup ecosystem globally with nearly 1 lakh startups, behind the US and China. No new unicorns were created in Q3, while it saw 7 acquisitions and 2 IPOs. Bengaluru led the funding in the fintech space, followed by Mumbai and Noida.
Peak XV Partners, Y Combinator, and Accel emerged as the leading investors in the fintech sector. The sector witnessed significant growth in specific segments with alternative lending, banking tech and RegTech emerging as top performers in the first half this year. Alternative Lending, in particular, clocked a remarkable growth of 259 percent compared to Q2 2023, reaching $305 million in funding.
The BNPL (buy now pay later) sector which has seen significant growth and adoption within the country, contributed to the growth in this sector. “In a time of global economic uncertainty, India's fintech sector has demonstrated exceptional resilience and growth", said Neha Singh, Co-Founder, Tracxn. This surge reflects the industry's dynamism and innovation, positioning India as a leading global fintech player, she added.
Banking Tech received funding of $282 million in Q3 2023, which is a growth of 396 percent compared to Q2, and 81 percent compared to Q3 2022. RegTech (regulatory technology) received funding of $229 million in Q3, which is a growth of 100 percent compared to the previous quarter. Payments, embedded finance and Internet-first insurance platforms saw a drop of 91 percent, 99 percent and 64 percent, respectively. Q3 2023 also witnessed significant funding in late-stage rounds, with Perfios, a real-time credit-decision platform, securing a notable $229 million in a series D round led by Kedaara Capital. The quarter saw seven acquisitions, a slight drop of 12 percent from eight acquisitions in Q3 2022. Two companies, Zaggle and Veefin went public in Q3.
