Tracxn, a leading global SaaS-based market intelligence platform, has released its Fintech India Report - 2022. The report, based on Tracxn’s extensive database, provides insights into India’s Fintech space.

Fintech startups in India raised a total of $5.65 billion in 390 rounds in 2022, a plunge of 47% in terms of funding amount and 29% in the number of rounds when compared with 2021. India is still the third-highest funded country in terms of funding received in the Fintech sector, only behind the US and the UK.  This drop in funding can be attributed to the decline in late-stage funding from $8.3 billion in 2021 to $3.7 billion in 2022, a drop of 56%.

India is currently experiencing a funding winter. Growing inflation and macroeconomic tensions have made investors step back from making big investment decisions. However, Fintech is one of the key sectors in the Indian startup ecosystem and has consistently been one of the top-funded sectors.  It was the second-highest funded sector in 2022, after Enterprise Applications.

The Fintech space in India is expected to continue growing in the long run. The shift towards digitization since the pandemic has accelerated the adoption of Fintech solutions significantly. Digital Payments and Lending, which were previously concentrated only in the major cities, are now becoming mainstream even in Tier II and III Cities across the country.

The convenience of using these services, compared with our traditional financial services infrastructure has also attracted a lot of users. A large unbanked population and rising mobile phone usage are some of the factors that will aid the sector’s growth in the long run.

This year, Fintech startups recorded 13 funding rounds of $100 million+ in value. This is a massive drop of 50%, from 26 rounds in 2021. Y Combinator, Tiger Global Management and Lets Venture were the most active investors in the space, with more than 20 investments in 2022. Only 4 startups in India’s Fintech sector received Unicorn status in 2022, far lower compared with 13 new Unicorns in 2021.

Among the cities, Fintech companies in the Delhi-NCR region (Delhi, Noida and Gurgaon) have raised a combined funding of $14.9 billion till date, followed by Bengaluru ($10.2 billion) and  Mumbai ($4.2 billion).