India’s fintech funding slumps 63% to $2 billion in 2023

Early-stage rounds faced a similar trend, with funding plummeting to $489 million, marking a stark 73% decline from the $1.8 billion bagged in 2022, said the report. Seed-stage rounds were also not immune to this downward trajectory, securing $145 million, a 69% drop compared to the $474 million raised in the preceding year.

“Despite a 63% decline, our 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 digitalisation have set the stage for a promising future,” said Neha Singh, co-founder at Tracxn.

Peak XV Partners, Y Combinator, and LetsVenture were the top investors in the space.

Alternative lending, payments and banking-tech were the top-performing segments in the Indian fintech sector. Alternative lending received a funding of $835 million in 2023, down from $2.28 billion in 2022. The Buy Now Pay Later (BNPL) segment saw significant growth due to its adoption within the country, which contributed to the growth of the sector, as per the report.

In fact, only two companies — Zaggle and Veefin, announced IPOs in 2023, compared to five companies that went public in 2022.

The Indian startup ecosystem overall experienced a challenging 2023 with funding hitting a seven-year low at about $8 billion, witnessing a stark 65% decline from the previous year's $25 billion, according to Traxcn.