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Indian FinTech investments for 2019 at $1 bn equals to that of entire CY’18

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Logo of Data Analytics firm Tracxn

Slowing economic activity across sectors and a tighter regulatory environment in the Indian market have not discouraged investors globally from betting on the country’s FinTech ecosystem. As per data collated by IBS Intelligence, about 11 FinTech start-ups raised around USD 365 million in July this year that puts the total investments coming into this sector at USD 1.16 billion, almost equalling the entire year’s FinTech funding at USD 1.4 billion in 2018.

Some of the major deals in July included around USD 100 million each in Flipkart-backed PhonePe and leading B2B payments facilitator PineLabs. New age start-ups such as BharatPe, PayMate and open banking startup Niyo raised about USD 75 million, USD 25 million and USD 35 million respectively.

Experts tracking the market are of the view that the FinTech space has not witnessed a major slowdown but the valuations at which funds are being raised have rationalized. But there could be a slowdown due to a dip in the overall economic sentiment globally.

“Fintech investments may go down for some-time only because of mismatch of valuation expectations. The overall sentiment seems to be low, so the investors are expecting better valuations, while entrepreneurs want to hold on until they get valuations they expect,” said Vikram Gupta, Founder of venture capital fund IvyCap Ventures. Gupta is a bit cautious.

But there are investors, who are optimistic about the FinTech space on back of various digital initiatives undertaken by the Indian government in the last few years.

Sanjay Mehta, founder of 100X.VC, said that, “We are extremely bullish on the Fintech start-ups. I believe 30% of our portfolio will be in BFSI start-ups either in B2B or B2C side. India is underbanked hence provides massive opportunity for Indian start-ups to solve the basic problems of getting them on digital banking channels with unique products for under-served.”

Harbour Front, a Japanese PE fund, is looking to invest up to USD 100 million in Indian FinTech start-up by FY 20. Last week, the company announced its maiden investment in India by pumping in an undisclosed amount in mortgage-tech company Easy Home Finance Limited, which is registered under the National Housing Board.

“Fintech Investor sentiment is positive across stages from early stage to late stage we are seeing consistent funding rounds across lending, insurance, payments, wealth, blockchain, SaaS-based tools etc. As well as a lot of other sectors such as health-tech that cuts across Fintech are also seeing good traction. There is a lot of positive action yet to happen in this space,” said Anuj Golecha, Co-founder, Venture Catalysts.

According to data analytics start-up Tracxn, the total investments coming into India’s FinTech sector stood at USD 800 million in the first half (H1) of calendar year 2019, up 14 per cent up from the USD 688 million raised in the year ago period.

While the investments were up, the number of funding rounds have decreased. In the H1’2019, there were only 82 rounds of funding as compared to 117 rounds in the corresponding period last year. The number of companies that received funding has also declined to 77 during the first half as against 108 companies in year ago period, which meant that investors pumped in more money into fewer well established start-ups and there were fewer early stage deals.

As per the data, more investors participated in the Series B and C rounds in H1’2019. Some of top funded startups were Policybazaar, InCred Finance, Billdesk, Acko, Niyo Solutions, Mswipe, Razorpay and Open amongst others. The top investors among others included SoftBank Vision Fund, Temasek, Tiger Global, Tencent, Sequoia Capital, Blume Ventures and Nexus Partners.

However, the market has not witnessed any big-bang deals in the first six months of 2019 with insurance aggregator Policybazaar raising the highest amount at USD 152 million in Series F round this year as compared to a whopping USD 1.4 billion raised by mobile payment company Paytm in 2017 in one round, which helped push the total funding activity to over USD 2 billion in the same year.

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