Approximately $1.47 billion was invested into businesses operating in the Fintech sector in India between January to June 2020, according to the latest MEDICI Report covering Indian financial technology markets.
The amount invested into India’s Fintech industry during H1 2020 was 60% greater than the capital allocated to businesses in the sector during H1 2019. There were 68 financial technology-related deals that were finalized between March and June 2020, according to the Global Fintech Festival Report from July 2020. But many of these deals may have been completed before March 2020 (which is when the COVID-19 pandemic began).
Around $4 billion in capital was invested into India’s Fintech sector during 2019. Only $1.8 billion in investments were made into the industry during 2018. There’s been a total of $5.8 billion allocated towards India’s financial tech ecosystem in the past 18 months.
A general lack of early-stage Fintech funding has impacted smaller businesses in India, as they struggle to cope with the COVID-19 outbreak and resulting economic challenges. Less than 10% of total financial technology funding has gone towards early-stage ventures, since last year, according to the report.
It also noted that the number of seed-stage Fintech deals were relatively high, however, the average funding value per deal was quite low.
Some Indian investors have been avoiding certain overcrowded or saturated Fintech sector businesses such as payments and lending, the report revealed. It also mentioned that about 60% of total Fintech funding went toward established or mature businesses – which includes Series G and later round investments.
There were 263 financial tech deals that were finalized during the past 18 months, the report confirmed. Digital or online lending has attracted substantial investments and payments have, for the most part, shifted their business strategy to provide more lending services, the report claims.
An increasing number of non-bank financial companies or NBFCs have teamed up with online lending platforms due to the decline in overall demand from several Indian Fintech sectors.
Neobanking saw substantial growth in India during the past 18 months. There are reportedly more than 15 neobanks in the country operating across consumer and business banking. Some of these banks might be preparing to conduct IPOs in the coming months, the report noted.
There were 2,174 Indian Fintech firms by the end of June 2020, the report revealed. Digital payments in India have surged, with UPI transactions reaching record highs recently following the Coronavirus outbreak.
Indian Insurtech Policybazaar, a digital insurance platform, is planning to conduct an IPO at a $3.5 billion valuation.