Indian Fintech Startups Raised $5.65 Billion In 2022: Tracxn Report

Indian fintechs, though facing macroeconomic headwinds over the last year, were the second most funded startup sector in India in 2022, according to data provider Tracxn.

A total of 390 funding deals worth $5.90 billion were made in the sector over the year, the report noted. The total funding amount and the number of deals fell 47% and 29% year-on-year, respectively.

The drop in funding was driven by a fall in late-stage deals, which declined from $8.3 billion in 2021 to $3.7 billion in 2022, the report said.

Late-stage deals occupied the lion's share of the amount of money deployed in India's fintech over 2021 and 2022, but seed and early-stage rounds dominate the total number of funding rounds. Of a total of 347 funding rounds in 2022, seed-stage and early-stage deals accounted for 228 and 102, respectively.

Funding rounds of $100 million and more also dropped by half year-on-year in 2022, to a total of 13 rounds.

A lot of new institutional investors also contributed to India's fintech funding boom.

The total number of unique institutional investors in Indian fintech almost doubled between 2021 and 2022, rising from 535 to 1,019, respectively, according to Tracxn's data. First-time institutional investors grew from 319 to 670 during the same period.

Y Combinator was the most active seed-stage investor, with 41 funding rounds in 2021 and 2022. Tiger Global and Sequoia Capital were the most active investors in the early and late-stage rounds, respectively.

Fintechs in India have focused their businesses around use cases ranging from payments to crypto assets, but insurance comparison platforms attracted the highest amount of funding over 2022, the report noted. Insurance platforms raked in $268 million over the year and were followed by subscription accounting firms, which raised $250 million in 2022.

Turtlemint, with a $120 million Series E round, and Chargebee, with a $250 million Series H round, attracted the largest funding rounds among the businesses in their respective verticals.

As investors pull back from funding growth aspirations in the sector, fintech startups are also eyeing consolidation. The number of acquisitions in the sector jumped by about 30% year-on-year in 2022 and stood at 38 acquisitions in 2022, according to the report.

On average, Indian fintech companies were acquired for $97.2 million over the last five years, the report said. The average acquisition price grew from $41.4 million in 2021 to $87.7 million in 2022.