India becomes 4th-highest funded fintech startup ecosystem globally

Peak XV Partners, Y Combinator, and Accel emerged as the leading investors in the fintech sector.

No new unicorns were created in Q3, while it saw 7 acquisitions and 2 IPOs. Source: Freepik

India's fintech sector saw a 68 per cent surge in funding in the July-September period (Q3) from the previous quarter, as the country became the fourth-highest funded fintech startup ecosystem globally, a report showed on Thursday.
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, according to the report by Tracxn, the leading market intelligence platform.

Peak XV Partners, Y Combinator, and Accel emerged as the leading investors in the fintech sector.

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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 per cent 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 per cent compared to Q2, and 81 per cent compared to Q3 2022.

RegTech (regulatory technology) received funding of $229 million in Q3, which is a growth of 100 per cent compared to the previous quarter.

Payments, embedded finance and Internet-first insurance platforms saw a drop of 91 per cent, 99 per cent and 64 per cent, respectively.

Q3 2023 also witnessed significant funding in late-stage rounds, with Perfios, a real-time credit-decisioning 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 per cent from eight acquisitions in Q3 2022.

Two companies, Zaggle and Veefin went public in Q3, said the report.

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