Indian fintech start-up funding falls 55% YoY in Q1 2023, says report

Indian fintech start-ups raised $1.2 billion in the first quarter of 2023, down 55 per cent year-on-year (YoY) due to rising inflation and high interest rates.

There were investments worth $2.6 billion in Q1 2022, said a report by Tracxn, a market intelligence platform. Funding, however, increased by 126 per cent quarter-on-quarter from Q4 2022, which saw investments to the tune of just $523 million.

India was still the second-highest funded "geography" in the world, behind the US, in Q1 2023. It occupies a spot in the top five geographies in terms of total funding activities.

Indian fintech saw six $100 million funding rounds in the first three months of 2023. PhonePe, Mintify, Insurance Dekho and KreditBee raised funds above $100 million during this period.

It was, however, an uneventful quarter in terms of IPOs and unicorns, or companies valued over $1 billion each. No company in the fintech space went public in Q1 and there were no new entrants in the unicorn club. However, there was a slight uptick in acquisitions. The sector witnessed 11 acquisitions in Q1 2023, as against six acquisitions in Q4 of 2022.

The sector is expected to remain attractive for investors on the back of rising digital payment solutions and internet penetration, coupled with a governmental push for a cashless economy.