Bengaluru, April 8 India secured the third position globally in terms of funding raised for the fintech sector in Q1 2025, following the US and the UK, a report showed on Tuesday.
A majority of the funding in this space has been seen in the late-stage rounds. Late-stage funding witnessed a 47 per cent increase to $227 million in January-March period, compared to $154 million raised in Q4 2024, said the report by Tracxn, a leading market intelligence platform.
The first quarter of this year witnessed a total funding of $366 million. March was the most funded month of the quarter, with $187 million raised, accounting for 51 per cent of the total funds.
The Indian economy faced bearish stock trends, US-imposed tariffs, global trade tensions, and rising inflation discouraging venture capital inflows.
Despite these challenges, India's GDP growth for FY 2025 is projected to remain resilient at approximately 6.5 per cent.
Furthermore, the rising acceptance of UPI beyond Indian borders in countries like Singapore, Nepal, and Sri Lanka presents a significant opportunity for Indian fintech players to expand operations overseas and attract more capital into the sector, according to the report.
The sector witnessed significant growth in specific segments, with banking tech, Internet-first insurance platforms, and investment tech emerging as top performers in Q1 2025.
Banking tech, the highest-funded sector, received a funding of $108 million, a 9 per cent increase compared to the $99 million observed in Q1 2024 and a substantial increase of 1,700 per cent compared to $6 million raised in Q4 2024, accounting for 29.59 per cent of the total funds raised in Q1 2025 in this ecosystem, said the report.
Neha Singh, Co-Founder Tracxn, said, "The Indian fintech sector continues to evolve despite market fluctuations. While funding levels have declined, the industry's long-term growth potential remains strong”.
“With increasing regulatory clarity, digital payment expansion, and a rising global footprint, we anticipate exciting opportunities for fintech startups in the coming years,” she mentioned.
The quarter witnessed 10 acquisitions, reflecting a 67 per cent and 100 per cent increase compared to that of 6 and 5 acquisitions in Q1 2024 and Q4 2024, respectively.
Bengaluru emerged as the leader in total fintech funding raised during Q1 2025, followed closely by Gurugram and Mumbai, said the report.
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