India ranks 3rd globally in fintech funding despite 33% lower infusion in 2024: Report

India ranked third globally in terms of funding received in the fintech segment despite a decline of 33 per cent on a year-over-year basis to USD 1.9 billion in 2024, market intelligence firm Tracxn said in a report on Monday.

The sector witnessed a decline in funding, driven by a broader slowdown in demand and geopolitical headwinds, Tracxn's Annual India fintech report 2024 said.

"The fintech sector experienced a notable decline in funding in 2024, with a total of USD 1.9 billion raised. This represents a 33 per cent decrease from the USD 2.8 billion secured in 2023. The Indian fintech ecosystem has solidified its position as one of the top three globally funded fintech ecosystems in 2024, trailing only the US and the UK," the report said.

The sector had raised USD 5.6 billion in 2022.

The highest funding of USD 805 during 2024 was received by the sector in the third quarter which was 61 per cent higher on a year-over-year (Y-o-Y) basis.

Additionally, 59 per cent of the total funding in 2024 was secured during the second half of the year, indicating a late-year recovery while August emerged as the most robust month for funding, contributing USD 434 million to the annual total.

"Despite the global funding slowdown, India's fintech ecosystem continues to demonstrate remarkable resilience and adaptability. The emergence of two new unicorns and a record eight IPOs in 2024 underscore the sector's ability to thrive amidst challenges," Tracxn, Co-Founder, Neha Singh said.

"As we look to the future, the sector is poised to build on these successes, driving financial inclusion and innovation while solidifying its position as a global leader in the fintech space," Singh said.
The year 2024 witnessed the emergence of two unicorns, Money View and Perfios, compared to a single unicorn in 2023 though there were only three USD 100 million-plus funding rounds recorded, marking a 50 per cent decline from the six such rounds in 2023.

The digital lending solutions dominated the funding received by accounting for 64 per cent of the total funding raised during the year.

The notable deals in 2024 included DMI Finance raising USD 334 million funding led by MUFG and Credit Saison raising USD 144 million during the year.

The late-stage rounds are the most affected.

Late-stage funding amounted to USD 1.1 billion, marking a 42 per cent reduction compared to the USD 1.9 billion raised in 2023, the report said.

The late-stage funding was USD 3.1 billion in 2022.

Early-stage funding rounds recorded a 16 per cent Y-o-Y drop to USD 562 million in 2024 from USD 667 million raised in 2023 and a 70 per cent decline compared to USD 1.9 billion in 2022.

Seed-stage funding declined 19 per cent Y-o-Y to USD 178 million in 2024 from USD 219 million in 2023 and 66 per cent from USD 529 million in 2022.

"Mergers and acquisition activity saw a slight dip, with 26 acquisitions recorded in 2024, down 16 per cent from 31 in 2023. Notable transactions included the USD 94.5 million acquisition of PureSoftware by Happiest Minds, and the USD 44 million acquisition of ET Money by 360 One," the report said.

The sector recorded eight IPOs in 2024 which was a 300 per cent increase compared to the two IPOs in 2023.

"Bengaluru maintained its leadership as the top hub for fintech funding in 2024, followed by Mumbai and Delhi. Among investors, Peak XV Partners, LetsVenture, and Y Combinator emerged as the top contributors overall.

Venture Catalysts, Y Combinator, and Antler led in seed investments, while Elevation Capital, GMO Venture Partners, and Peak XV Partners dominated early-stage funding," the report said.

Late-stage investments were spearheaded by Creaegis, The Rise Fund, and Amara Partners.

The Investment Tech segment garnered USD 320 million in funding in 2024, reflecting an 11 per cent decline from the USD 358 million raised in 2023.

The Payments segment, however, experienced a sharper decline, attracting USD 194 million, a 77 per cent drop from USD 836 million in 2023 and an 81 per cent decrease from USD 1.01 billion in 2022.