Amid the ongoing funding winter and multiple regulatory changes, fintech emerged as the top sector in the first quarter of 2023, accounting for almost 45% of the funding raised by Indian tech startups during the period.
Overall, the funding raised by Indian startups plummeted 75% to $3 Bn during Q1 2023 from $12 Bn in the corresponding quarter of 2022, as per Inc42’s ‘Indian Tech Startup Funding Report Q1 2023’.
Populated with over 4,000 startups, the fintech sector raised $1.28 Bn funding in Q1 2023, followed by the ecommerce segment. Ecommerce startups raised $633 Mn during the quarter, while enterprisetech was a distant third with funding of $194 Mn.
While fintech startups raked in the highest amount of funding, enterprisetech and ecommerce sectors surpassed fintech in terms of deal count with 41 and 40 deals, respectively, during the quarter. At 25, fintech funding deals accounted for just 11.7% of the total deals during the March quarter.
Decline In Funding & Deal Count: While the overall deal count declined 58% (YoY) to 213 deals in Q1 2023 from 506 deals in the year-ago quarter, funding deals in the fintech sector plummeted 69% from 81 in Q1 2022.
The amount of funding raised by fintech startups also fell 24% from $1.7 Bn in Q1 2022.
Stage-Wise Funding: While late-stage fintech startups bagged the highest funding deals in Q1 2023, the ecommerce sector led growth-stage funding. Enterprisetech led both bridge and seed-stage funding rounds in terms of both funding amount and deal count.
The total number of late-stage funding deals in Q1 2023 stood at 22, while growth-stage startups saw 51 funding deals. At 102, seed stage saw the maximum number of deals during the quarter.
Top Fintech Funding Rounds: PhonePe was among the major startups which raised funding in Q1 2023. After shifting its domicile to India in the latter half of last year, the Walmart-backed fintech giant raised $350 Mn in a funding round led by General Atlantic in January this year to enter the decacorn club. Soon, it raised another $100 Mn in primary capital from the likes of Ribbit Capital, TVS Capital Funds, and Tiger Global. Last month, PhonePe raised $200 Mn in primary capital from Walmart.