India’s fintech funding shrinks over 60% to $2 billion

India’s fintech funding shrinks over 60% to $2 billion
Source: Pixabay

  • The fintech space saw five funding rounds surpassing the $100 million mark.
  • The sector saw 31 acquisitions, and two initial public offers in 2023.
  • Alternative lending, payments, BankingTech raised the most funds in a tough year.
As the funding winter rages on, India’s fintech sector saw fund inflows decline by 63% in 2023. The sector raised a mere $2 billion for the year – lower than $5.4 billion raised in 2022 and $8.4 billion in 2023, says a report by Tracxn.

In spite of the fall, India ranked third globally in 2023 in terms of fintech startup funding. Globally, funds have become tight for startups due to rising interest rates, as well as tough and uncertain macroeconomic conditions.

“Despite a 63% decline, the sector stands strong as the third-highest funded ecosystem globally, affirming its position as a hub of innovation. The implementation of regulatory measures and the government's commitment to digitalization have set the stage for a promising future,” said Neha Singh, co-founder at Tracxn.

Only one unicorn this year

The year witnessed five funding rounds surpassing the $100 million mark. Perfios, a real-time credit decision platform, raised $229 million in a Series D round led by Kedaara Capital. Mintifi, an online marketplace for business loans, secured $110 million in a Series D funding round led by Premji Invest.


The sector also saw only one unicorn – InCred that was created in the year. But the sector also saw consolidation. There were 31 acquisitions, similar to the previous year.

TrillionLoans was acquired by BharatPe for $36 million, Goals101 acquired by M2P for $30 million; and Upwards acquired by LendingKart for $12.1 million. Two companies, Zaggle and Veefin, announced initial public offers in 2023, compared to five companies that went public the year before.

Slowdown in funding was seen across stages of deals. While late-stage rounds witnessed a 56% drop, early-stage rounds fell much sharply at 73%. Seed-stage rounds were also not immune to this downward trajectory, seeing a 69% drop.

Fintech’s funding worries
Stage of fundingFunds raised in 2023Funds raised in 2023% change
Late-stage$1.4 billion $3.2 billion -56%
Early-stage$489 million$1.8 billion-73%
Seed$145 million$474 million -69%
Total$2 billion $5.4 billion-63%
Source: Tracxn

Alternative lending, BankingTech shine

Even as funding was scarce, sectors within fintech like alternative lending, payments, and bankingtech saw a good run. Alternative Lending received funding of $835 million in 2023, down from $2.28bn in 2022.

The BNPL (buy now pay later) segment saw significant growth due to its adoption within the country, which contributed to the growth of the sector. “The digital lending space, which increasingly relies on customer data for its product marketing and development, is also likely to grow owing to the government’s recently launched Digital Personal Data Protection Act, which will ensure more transparency and customer trust in the sector,” the report added.

Banking Tech received funding of $331 million in 2023, which halved compared to last year. But the segment substantially benefited from digitalization, and digital banking has seen widespread adoption due to rising internet and mobile device penetration in cities as well as rural areas.

“Additionally, the Indian government has recently allocated about $16.7 billion towards the BharatNet project to increase broadband connectivity within rural areas, which will help widen the reach and potentially attract more investments into the sector,” the report said.

Peak XV Partners, Y Combinator, and LetsVenture were the top investors in the space. We Founder Circle, Y Combinator, and 100X.VC led seed investments; while Accel, Omidyar Network India, and Elevation were prominent investors in early-stage investments. OP Finnfund Global Impact Fund was the leading late-stage investor in 2023.

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