India's fintech funding surges 66% to $778 mn in Q3 2024

India's fintech ecosystem is showing signs of revival, with a 66% year-on-year (YoY) growth in funding, reaching $778 million in the third quarter of 2024 (Q3CY24), according to the latest Tracxn report. This marks a big leap from the $471 million raised during the same period in 2023. “India ranks 4th in all-time funding for the FinTech sector, following the United States, China, and the United Kingdom. However, in Q3 2024, India surged to 2nd place in funding, reflecting significant recent growth in the sector,” the report states.

Fintech acquisitions in India saw a 50% drop, with only four acquisitions in Q3CY24 compared to eight in Q3CY23. Nevertheless, India’s fintech sector remains the fourth largest globally, trailing only the United States, China, and the United Kingdom.

The report notes that fintech funding more than doubled with a growth of 165% from $293 million raised in the second quarter of 2024 (Q2CY24). A key contributor to this surge was DMI Finance, a company specialising in consumer and SME loans, which secured $334 million in Q3CY24. While the amount of funding has grown significantly, the number of funding rounds declined by 25%, from 62 rounds in Q3CY23 to 46 rounds in Q3CY24.

The leading segments in terms of funding were alternative lending, investment technology, and payments. Alternative lending stood out, attracting $517 million in Q3CY24, a 49% increase from the $348 million raised during the same period last year. In contrast, investment technology saw a sharp decline, securing $109 million in Q3CY24, down 58% from the $257 million raised in Q3CY23. Meanwhile, the payments segment garnered $93 million in funding for Q3CY24, according to the report.

The report highlights that the RegTech and Insurance IT sectors were the weakest performers in Q3CY24. The RegTech segment saw no funding in the third quarter of 2024, a stark contrast to the $238 million raised in Q3CY23. Similarly, Insurance IT experienced a steep decline, receiving only $163k in Q3CY24, compared to $230 million in the same period last year, marking a near 100% drop.

It further notes that only two companies went public in Q3 2024, a decrease from the three companies that had done so in Q3 2023. The Indian fintech startup ecosystem witnessed one unicorn in Q3 2024, as Moneyview achieved unicorn status in September 2024.

"The resurgence in funding for the Indian FinTech industry signifies a pivotal moment in our journey towards becoming a global FinTech hub. With rising digital adoption and supportive government policies, we are positioned for sustained growth. Our report highlights not just funding numbers but the enduring potential of Indian startups to redefine the future of finance," says Neha Singh, co-founder of Tracxn.