Inc42's Q4 2022 Fintech Report

State Of Indian
Fintech Report
Q4 2022
InFocus Lendingtech
Table Of Contents
03 India’s Digital Economy In A Nutshell 29 Lendingtech In India: The Dawn Of Digital Lending
04 Fintech Market In India: A Snapshot Global vs Indian Lendingtech

Key Lendingtech Terms
05 India’s Fintech Landscape: Key Players
India’s Lendingtech Landscape
06 India’s Fintech Opportunity How Lendingtech works
Market Size Lendingtech Opportunity In India: B2B and B2C
Market Size Across Sub-Sectors

40 Funding Ecosystem In India
Fintech In India: Key Growth Drivers
Funding Trends
09 India’s Fintech Startup Ecosystem
Notable Lendingtech Startup Investors In India
India Vs China Vs USA: Fintech Startup Ecosystem Comparison Most Funded Lendingtech Startups in Q3 2022
Top 10 Biggest Fintech Startup Funding Rounds In Q3 2022 Financial and Funding Analysis Of Lendingtech Startups
Indian Fintech Startup Ecosystem: Q3 2022
Comparative Analysis
Fintech Funding Trends
Lendingtech In India: SWOT Analysis
Fintech M&As Trends
Emerging Trends and Challenges
Top Indian Fintech Startup Hubs In Q3 2022
15 Early Stage Fintech Startups To Look Out For 56 Fintech Startups’ Stock Performance
27 Fintech In India: Key Developments

57 Emerging Trends: Fintech In India
© INC42 MEDIA | NOT FOR DISTRIBUTION / 3
India’s Digital Economy In A Nutshell

1,500
1.3 Bn+ 61% 44%
Internet Users Internet Penetration Increase In Internet
1,343
By 2030 In India Users From 2022 To
1,310
1,273
1,132
2030
1,186
1,134
1,000
1,075
Internet Users (Mn)
1,008
$0.68 4.7 Hours 305 Mn+

932
846
Per GB Internet Average Hours Spent Users Doing Online

749
Cost In India On Mobile Per Day Transactions In

500 Per User India
$131 Bn+ $2.7 Tn 373 Mn+

Total Volume Of UPI Total Value Of Upi Estimated Rural
0 Transactions As Transactions As Internet Users In
2020 2021 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F
On Oct 2022 On Oct 2022 2022
Source: Statista, NPCI, Bain & Company, App Annie

F stands for forecasted.
Fintech Market In India: A Snapshot
Market Opportunity Venture Capital Unicorns & Soonicorns
Market Opportunity Total Funding Unicorns In

$2.1 Tn (2030) $24 Bn (2014 to Q3 2022) 22 India
CAGR Funding CAGR Soonicorns In

18% (2022 to 2030) 57% (2016 to 2021) 33 India
The Most Lucrative Active Fintech Combined Valuation

Lendingtech Market (2030) 4.2K+ Startups In India $68 Bn Of Unicorns
Market Opportunity Funded Fintech Combined Valuation

$48 Bn For Neobanking 660+ Startups $12 Bn+ Of Soonicorns
(2030)
India’s Fintech Landscape: Key Players

UNICORNS Total Unicorns: 22 Combined Valuation: $68 Bn Total Funding: $13 Bn Top Hub: Bengaluru
SOONICORNS Total Soonicorns: 33 Combined Valuation: $12 Bn+ Total Funding: $5 Bn Top Hub: Bengaluru
GROWTH STAGE Total Funded Startups (Q3 2022): 11+ Total Funding (Q3 2022): $224 Mn+ Top Hub (Q3 2022): Bengaluru
Fintech Market Opportunity In India: Lendingtech is the most lucrative

segment in fintech
Market Size (2022) Market Size (2030) CAGR (2022 to 2030) % Share Market Size (2030)
Various socio-economic factors such as growing

Overall Fintech Market $584 Bn $2.1 Tn 18% - per capita income, broader inclusivity of formal
finance and greater internet penetration in rural
Lendingtech $270 Bn $1.3 Tn 22% 60% areas are the critical triggers behind the growth of
the Indian lending market.
Insurtech $87 Bn $307 Bn 17% 14% The prevalence of digital players in two major
fintech segments — lendingtech and insurtech —
Payments $165 Bn $253 Bn 5% 12% has played a pivotal role in fuelling confidence in
the fintech sector in India.
Neobanking $48 Bn $183 Bn 18% 9%
The importance of a strong market outlook in
lendingtech and insurtech can be ascertained from
Investment tech $9.2 Bn $74 Bn 30% 3%
the fact that the two are estimated to command
74% of the fintech market opportunity by 2030
Fintech SaaS $4.6 Bn $31 Bn 27% 1.5%
Source: Multiple secondary source, Inc42 calculations

Note: The market size refers to the total addressable market (TAM). It has been calculated using a bottom-up approach for the overall fintech
market size and top-down for the fintech segments mentioned.
India’s Fintech Startup Landscape: Who’s Who In Subsectors

Payments Lendingtech Investment Tech Insurtech Neobanking Fintech SaaS Cryptocurrency
Key Growth Drivers: Fintech In India

Rise in formal employment: The number of EPFO accounts on payroll doubled from 6.1 Mn in FY19 to 12.2 Mn in FY22, indicating the growing number of employed
individuals in the formal sector who would prefer borrowing from institutional lenders like banks and NBFCs instead of local moneylenders.
Increasing per capita income: For Indians, the gross national income (GNI) per capita has increased by 60% in the past 10 years, from $1,360 (2011) to $2,170 (2021),
Socio-Economic compared to the BRICS (Brazil, Russia, India, China & South Africa) average absolute growth rate of 54% during the same period.
Factors
Deepening financial inclusion: As per the World Bank, the percentage of the Indian population (aged 15+) with a bank account increased from 35% (2011) to 78% (2021).
Also, 78% of the people in the poorest 40% bracket had a bank account in 2021, compared to 27% of account holders in 2011
Growing smartphone adoption: India has 931 Mn smartphone users in 2022 compared to 91 Mn in 2012, a 10.2x growth in 10 years. Globally, the country has the
second-highest number of smartphone users.
Technology
Better internet penetration: The number of internet users in India is estimated to reach 1.3 Bn by 2030 from 749 Mn in 2020, a 1.7x increase.
Triggers
Superfast internet speed: The average speed of mobile internet (download) in India more than doubled, from 9.11 Mbps (2018) to 18.6 Mbps (July 2022). With the
implementation of 5G by March 2023, internet speed across the country is expected to increase 20x to approximately 372 Mbps.
Increasing venture capital inflow: The five-year (2016-2021) CAGR of VC investments in Indian fintech startups stood at 57%, making it the second most-funded sector
in the Indian startup ecosystem. Out of the $131 Bn raised by Indian startups between 2014 and H1 2022, fintech bagged 18%, second only to ecommerce, which
accounted for 23% of the total funding.
Market Factors Growing addressable market: The overall fintech market opportunity in India is estimated to reach $2.1 Tn by the year 2030. Growing at a compounded annual growth rate
(CAGR) of 18% from 2022 to 2030
Proven Exits & Scale: Out of the 102 Indian soonicorns, fintech startups are likely to account for 32%, the single highest share. With the likes of Paytm and Fino Payments
Bank among the 12 Indian startups listed on Indian stock exchanges, investor confidence in exits through IPOs is no longer a pipe dream.
Source: EPFO India, World Bank, ET, Ookla, Inc42

Global Fintech Startup Ecosystem Comparison: Indian Fintech Startup

Ecosystem Growing Faster Than China
Total Fintech Funding (2014 - Q3 2022) $24 Bn $96 Bn $241 Bn
Startup investment CAGR (2016 to 2021) 57% 12% 72%
Number of fintech unicorns 22 13 132
Average ticket size of startup investment 2021 $27 Mn $29 Mn $22 Mn

Source: Inc42
Note: For startup investment data on the United States & China we have referred to Crunchbase.
Number of fintech unicorns in China is taken from CFTE
Top 10 Biggest Fintech Startup Funding Rounds In Q3 2022

Company Name HQ Subsector Funding Stage Round Size Notable Participating Investors
Delhi NCR Lendingtech Late Stage $270 Mn Uncorrelated Ventures, Fasanara Capital, Abstract Ventures
Bengaluru Payments Late Stage $140 Mn GIC, Sofina, Tiger Global, Falcon Edge, Dragoneer
Mumbai Investment Tech Late Stage $135 Mn Steadview Capital, B Capital Group, Coinbase, Polychain
Mumbai Insurtech Late Stage $120 Mn Amansa Capital, Jungle Ventures, Nexus Venture Partners
Mumbai Lendingtech Growth Stage $90 Mn MAJ Invest, Fasanara Capital
Mumbai Lendingtech Late Stage $80 Mn Vertex Growth, Brunei Investment Agency, Vertex Ventures SEA India
Jaipur Lendingtech Growth Stage $65 Mn Norwest Venture Partners, Faering Capital, MAJ Invest
Chennai Lendingtech Late Stage $55 Mn Lightrock India, Creation Investments
Bengaluru Neobank Late Stage $50 Mn IIFL, Temasek, Tiger Global, 3one4 Capital
Bengaluru Lendingtech Late Stage $50 Mn Tiger Global, Moore Strategic Ventures, Insight Partners, GMO Venture Partners
Bengaluru Investment Tech Growth Stage $47 Mn WestBridge Capital, Pravega Ventures
Indian Fintech Startup Ecosystem: 2022
Q3 2022 Q2 2022 Q1 2022
Total Funding $816 Mn $1.78 Bn $1.77 Bn

(-68) YoY (+19%) YoY (+2.6x) YoY
Funding Deals 58 83 81
(-28%) YoY (+38%) YoY (+50%) YoY
Mergers & Acquisitions 5 7 7

(No change) YoY (No change) YoY (No change) YoY
Average Ticket Size Of Investment $15 Mn $24 Mn $25 Mn

(-59%) YoY (-24%) YoY (+60%) YoY
Source: Inc42
Indian Fintech Startups Have Raised $24 Bn Since 2014

8.0 300
6.0
200
Funding Amount ($ Bn)
Deal Count
4.0
100
2.0
0.0 0
2014 2015 2016 2017 2018 2019 2020 2021 Upto Q3 2022
Funding Amount ($ Bn) Deal Count
Source: Inc42
Fintech Startups Raised $816 Mn Across 58 Funding Deals In Q3 2022

1000 40
Q3 2022 shows clear downward trend both
in funding amount and deal count.
750 30
Funding Amount ($ Mn)
Deal Count
500 20
250 10
0 0
Jan Feb Mar Apr May Jun Jul Aug Sept
Funding Amount ($ Mn) Deal count
Source: Inc42
Fintech In Q3 2022: Sub-sector Wise Venture Capital Inflow Split
Lendingtech
10
Insurtech 320 Insurtech 17.2%
6.9% 4
0.9% Fintech SaaS
7 Lendingtech
2 3.4%
Payments
39.3%
Payments 4
8.2% 67 6.9%
Total Funding Deal Count

Neobank $816mn 58
11.3%
92
Neobank
29.3% 17 21
194
Investment Tech 135 Fintech SaaS
Investment Tech
16.5% 23.8%
36.2%
Source: Inc42
Fintech Funding Showed A 68% Fall In Q3 2022

4000 100
Trends shows the funding winter has began.This trend
could continue in coming quarters.
3000 75
Funding Amount ($ Mn)
2000 50
Deal Count
1000 25
0 0
9
2
19
01
01
01
02
02
02
02
02
02
02
02
02
02
02
0
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Funding Amount ($ Mn) Deal Count
Source: Inc42
After Reaching Its Peak In Q4 2021, Fintech Average Ticket Size

Continues To Fall
40 59% YoY decrease in average ticket of fintech
funding in Q3 2022
30
Average Ticket Size in ($Mn)
20
10
0
Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022
Source: Inc42
Fintech In Q3 2022: Stage Wise Venture Capital Inflow
Funding Amount YoY Change Average Ticket Size YoY Change
Seed Stage $109 Mn -12% $4.5 Mn -5%
Bridge Funding $20 Mn -30% $2.8 Mn -50%
Growth Stage $224 Mn -78% $20 Mn -56%
Late Stage $463 Mn -66% $42 Mn -48%
Source: Inc42
Top Fintech Startup Hubs In India: Bengaluru & Delhi-NCR commanded over 73%
share in total fintech funding observed between 2014 & Q3 2022
Total Funding Amount (2014 to Q3 2022) Total Funded Startups 5-Year-CAGR (Venture Capital Inflow) Total Active Investors
Bengaluru $9 Bn 223 117% 888+
Delhi-NCR $8.6 Bn 152 56% 611+
Mumbai $4.01 Bn 172 25% 609+
Chennai $1.03 Bn 31 26% 133+
Hyderabad $461 Mn 23 89% 65+
Pune $396 Mn 23 107% 33+
Ahmedabad $261 Mn 8+ Not Applicable 18+
Source: Inc42
Note: The hubs are ranked based on the fintech funding observed in these hubs between 2014 & Q3 2022
Fintech Startup Funding Highly Skewed Towards Top Three Startup Hubs
In India
3 (12.5%)
As is the general trend across the startup
ecosystem in India, venture capital funding in the
fintech sector is largely skewed towards the top
three startup hubs — Bengaluru, Delhi-NCR, and
$24 Bn
Mumbai.
Total Funding
(2014 & H1 2022)
On the other hand, Chennai, Hyderabad, and Pune
are the emerging hubs housing fintech startups. In
the past five years (2016-2021), the venture
capital inflow in these cities grew at a CAGR of
26%, 89%, and 107%, respectively.
21 (87.5%)
Bengaluru, Delhi-NCR & Mumbai Others

Source: Inc42
Bengaluru Remains Top Destination For Fintech Startup Funding In Q3 2022
Bengaluru Bengaluru
Mumbai Mumbai
Delhi-NCR Delhi-NCR
Pune Pune
0 5 10 15 20 0 100 200 300
Deal Count Funding in $Mn

Source: Inc42
105 Mergers & Acquisitions Recorded In Indian Fintech Startup Ecosystem

Since 2015
30
In 2021 pandemic influenced fintech adoption along with the race to go public,
fueled M&As in the fintech sector. BharatPe, M2P Fintech, Razorpay were some
notable acquirers last year
20
M&A Count
10
0
2015 2016 2017 2018 2019 2020 2021 Upto Q3 2022
Source: Inc42
Mergers & Acquisitions In Indian Fintech Startups Peaked From 2021

8
India witnessed jump in fintech M&A deals in 2021 and since

6 then the numbers have been consistent. Fueled primarily by
the rush towards market consolidation during the fintech
bull-run of 2021
M&A Count
0
Source: Inc42
Notable Indian Fintech Investors In Q3 2022

Company Name Deal Count Notable Startups Invested
Source: Inc42
Note: Only publicly disclosed deals have been considered for the calculations
15 Early Stage Fintech Startups To Look Out For

Company Name Sebsector Headquarters Funding in $Mn Notable Investors
Lendingtech Delhi NCR 4,500,000 DMI Sparkle Fund
Investment Tech Delhi NCR 4,000,000 Burman Family Office, Shantanu Agarwal, Arjun Jain, Devesh Sachdev, Rajesh Razdan
Cryptocurrency Bengaluru 4,000,000 BEENEXT, Arkam Ventures, Accel, Saison Capital, Premji Invest, Blume Ventures
Lendingtech Bengaluru 3,100,000 Stellaris Venture Partners, Avaana Capital
Lendingtech Delhi NCR 3,000,000 Undisclosed
Cryptocurrency Bengaluru 3,000,000 Hashed Emergent, Athera Venture Partners, Better Capital, Whiteboard Capital
Lendingtech Mumbai 2,700,000 Undisclosed
Investment Tech Mumbai 2,600,000 Nirmal Jain, Incred Capital, Jayesh Parekh, Awdhesh Krishna
Company Name Sebsector Headquarters Funding in $Mn Notable Investors
Fintech SaaS Pune 2,500,000 Varanium Fund, IIFL, DMI Sparkle Fund, M2P
Investment Tech Delhi NCR 2,500,000 Metaplanet VC, Goldwater Capital, Y Combinator, Taurus VC, Original Capital
Fintech SaaS Hyderbabd 2,300,000 Blume Ventures, Titan Capital, T-Fund, Speciale Invest, Bharat Founders Fund, T2D3
Neobank Delhi NCR 2,250,000 Khosla Ventures, Y Combinator, 8VC, Section32
Investment Tech Bengaluru 2,200,000 M Venture Partners, Kunal Shah, Shashvat Nakrani, Suhail Sameer, Ruchi Kalra
Fintech SaaS Mumbai 1,600,000 IPV
Investment tech Mumbai 770,000 2am VC, Broom Ventures, Incisive Ventures, Varanium Capital, Magic Fund
Indian Fintechs Under Government Scanner

Reason For Being Under ED Scanner
Alleged involvement in transactions routed by illicit merchants or other parties
Alleged partnerships with Chinese entities that are illegal lenders
Alleged involvement in money laundering and with illegal loan apps
Crypto scams
Flouting Indian taxation norms under FEMA by remitting funds to foreign entities
Probe into alleged money laundering
Contravention of FEMA under the guise of facilitating forex trading
It was the office address of multiple fraudulent companies that operated illegal lending apps
Indian Fintech Startup Ecosystem: Key Developments
Single-block and multiple debits for UPI

On December 5, the RBI announced that it will soon roll out single-block and multiple debit functionality for the existing Unified Payment Interface (UPI), making it more
convenient for ecommerce transactions and investments in securities. The new feature will put UPI on a par with traditional credit cards.
SEBI to track stock market recommendations featured on TV shows

On December 5, SEBI, the capital market regulator announced to have developed an AI system called Pinaka (picture-based information news accumulator and key information
analyser) that will scan bourse-related TV shows and form a database of recommendations made on those shows. SEBI will scrutinise these stock recommendations and report
any wrongdoing.
Fake stock tips under SEBI scanner

SEBI carried out three search-and-seizure operations in the year 2022, as stated in its annual report, 2021-2022 to put a check on fraudulent stock tips circulated through social
media and pump-and-dump schemes. In a letter to the Association of Mutual Funds in India (AMFI), the capital market regulator directed mutual funds to monitor social media
platforms regularly to track such activities.
RBI pilots e-rupee for retail

The RBI kickstarted the pilot for its retail digital rupee on December 1 by issuing INR 1.71 Cr to four participating banks – State Bank of India, ICICI Bank, Yes Bank and IDFC First
Bank across Mumbai, New Delhi, Bengaluru and Bhubaneswar. It is expected that based on user demand and bank’s liquidity requirements, the central bank will be mining more
digital rupee over the next few days. It aims to reach 50,000 merchants and customers by end of 2022. Prior to that, RBI commenced the first pilot of digital rupee for the wholesale
segment (e₹-W) on November 1, 2022. The use case for this pilot will be the settlement of secondary market transactions in government securities and is expected to make the
inter-bank market more efficient.
Digital lending guidelines to curb predatory practices

The digital lending guidelines issued by the RBI came into effect on December 1, 2022. Released in August, the central bank’s policies sought to crack down on the predatory
practices of digital lenders, including NBFCs, and fintech players. The guidelines aim to protect customers from exorbitant interest rates and prevent unethical loan recovery
practices.
Lendingtech In India
The Dawn Of Digital Lending
Lendingtech In India Vs The World
India USA United Kingdom Germany
Total Lending Market value in 2022 $218 Bn $12 Tn $ 2 Tn $7.6 Tn
Estimated Percentage growth In

Digital lending(CAGR) 22% 26% 28% 12.44%
Estimated number of users in Digital

Payments by 2027
1.1 Bn 320 Mn 65 Mn 70 Mn
Total Funding (2014 to Q3 2022) $7 Bn $51 Bn $14 Bn $4 Bn

Source: Inc42 calculations, Statista, secondary sources
Note: Only venture capital inflow for India is based on Inc42 data, all other data points are from multiple sources
Key Lendingtech Terms
Digital Lending Digital Lending Lending Service Buy Now Pay Later
Apps/Platforms (DLAs) Provider (LSP)
A remote and automated lending (BNPL)
process, largely by use of seamless Mobile and web-based applications An agent of a Regulated Entity who
It is an instant micro credit provided to
digital technologies for customer with user interface that facilitate carries out one or more of lender’s
customer to make digital and retail
acquisition, credit assessment, loan digital lending services. DLAs will functions or part thereof in customer
purchases.
approval, disbursement, recovery, and include apps of the REs as well as acquisition, underwriting support,
associated customer service those operated by LSPs engaged by pricing support, servicing, monitoring,
REs for extending any credit recovery of specific loan or loan
facilitation services in conformity with portfolio on behalf of REs in
extant outsourcing guidelines issued conformity with extant outsourcing
by the Reserve Bank guidelines issued by the Reserve Bank
Source: RBI
India’s Lendingtech Landscape

B2B lending B2C lending B2B-B2C lenders/Aggregators P2P lending Lending SaaS
(Enabling credit to business) (Consumer loans and products catering to both consumers and (connecting individual lenders and (Providing tech for digital lending)
across categories) businesses borrowers)
How Lendingtech works
Balance sheet lending(Digital underwriters):”Financial B2B Digital Lending

service involving extension of monetary loans, where
the lender retains the loan and associated credit risk of B2C Digital Lending
the loan on its own balance sheet” Line of credit
Supply chain Financing
SMB lending
Invoice financing
Fintech Lending Marketplace/ Hybrid Lender: ”Platform which may P2P
offer loans from their blacesheet or use marketplace Secured Lending
Service provider
funding option.
Unsecured lending
Hybrid Lending
Proxy lending
BNPL
Marketplace Lending(Digital Aggregators): “Platform Corporate Cards
which connects lenders with borrowers/ customers Instant Loans
and investors who may buy or invest in such loans/
lend to such borrowers”. Advance salary
Classification Of Lendingtech Ecosystem
RBI Regulated Banks, NBFCs, Lending Service Providers
Lendingtech Unregulated But Authorised For Lending State Approved Cooperative Banks,
Ecosystem State Approved Corporate Loans
Entities Lending Outside The Purview Of

Fintech Lending Service Providers
Any Statutory/ Regulatory Provisions
Evolution In Lending In India

Pre 2017 Post 2017
Market Share Banks were the main institution in lending sector. Multiple Players in the lending sector.
Traditional way of vetting the lender: Credit Score & Income Many ways to vet the lender such as Digital Data, Advanced
Credit Scoring Statements. Algorithm.
Investment Funds for investment were in the hands of few. Funds for investments are coming from many sources.
Operations Relied heavily on documentation and physical spaces. Relies on Digital data and does not require physical spaces.
Human Biases/Error are removed through AI and Data driven

Error Human Biases/Error were common.
decision
Systems Bank and card payment settlement systems. Non-bank settlement, Blockchain
Accessibility Less accessible to people. Accessibility is the bedrock of Digital lending
Time Time processing and disbursal of loans can take weeks to Processing and disbursal of loans can take few hours to few
months. days
Age Group Wise Lendingtech Opportunity In India

Age Groups (Digital lending consumers) Total Population Ideal digital lending products
18 to 24 250 Mn (17.78%) BNPL, Instant loans
25 to 34 233 Mn (16.55%) BNPL, Supply Chain Financing, Invoice financing, Corporate Cards, Line of credit, SMB lending, P2P Instant loans
35 to 44 202 Mn (14.34%) BNPL, Supply Chain Financing, Invoice financing, Secured Lending, Corporate Cards, Line of credit, SMB lending, P2P, Instant loans
45 to 54 154 Mn (10.97%) Supply Chain Financing, Invoice financing, Secured Lending, Corporate Cards,
55 to 64 113 Mn(8.00%) Secured Lending, Corporate Cards
Above 65 years 98 Mn (6.97%) Secured Lending
The lendingtech sector's key demographic is 18-44. BNPL, instant loans, and P2P are key offerings. Given that this age group has higher tech
literacy and adoption of new age technologies than others.
Lendingtech Opportunity In India: All about B2B digital lending
THE ADDRESSABLE MARKET IN NUMBERS POLICY OVERVIEW
Widening access to financial services with India stack

63 Mn 51%
India Stack is an indispensable part of the Indian economy. A collection of open APIs, it
Total number of SMBs Of registered SMBs in
revolutionised Indian fintech startups and banking. With Aadhaar as its foundational layer, India
(MSMEs) in India India are rural companies Stack combined eKYC or digital identity, Aadhaar-enabled payments system, unified payments
interface (UPI) and account aggregator. With India envisaging to become a $10 Tn economy target,
India Stack is expected to play a crucial role in achieving this goal moving forward.
$128 Bn 40% Zero defect zero effect (ZED) certification

Loan amount disbursed Year-on-year surge in
This is an initiative to drive greater quality control across the MSME space while promoting
to SMBs in FY21 SMB loan disbursal in FY21
sustainable business practices that do not adversely impact the environment. As more small and
medium enterprises move towards sustainability and tech-driven quality control, the demand for
faster access to credit is likely to increase.
51 Mn Recognition of P2P lenders

SMBs in India lack access to formal credit The RBI’s recognition of P2P platforms as NBFCs has accelerated digital lending activities, helping
startups raise capital more quickly and efficiently.
Source: IBEF, United Nation, and Ministry of MSME

Lendingtech Opportunity In India: All about B2C digital lending
THE ADDRESSABLE MARKET IN NUMBERS POLICY OVERVIEW
New opportunities for NBFCs

173 Mn 81% Under the new amendment of Companies act, NBFCs are now covered by the financial institution
Estimated number of Estimated increase in the provisions of the Act, giving them several privileges that are comparable to those enjoyed by
households with annual number of households (with commercial banks. Any business acting as an NBFC must register under the Companies Act and
income above INR 5 Lakh income greater than INR acquire a registration certificate from RBI.Failure to do so will result in fine and imprisonment.
by 2030 5 Lakh) between 2019 and 2030
Regulation of digital lending apps
$963 Bn $8.5 Bn The RBI Working Group has proposed setting up a nodal agency called DIGITA (Digital India Trust
Agency) to supervise all digital lending apps in India. The agency will also check and validate
Overall value of retail loan Total origination value of B2C software updates, patches and publisher certificate forgeries. Besides, DIGITA will issue basic
portfolio in FY21 loans in FY21 digital guidelines that all digital lending companies must follow.
RBI regulation
80 Mn+ If there are any penalties assessed against the borrowers, they will be dependent on the
Number of credit cards in India in FY22, witnessing a outstanding loan balance. Additionally, the borrower should get upfront disclosure of the rate of
27% YoY increase such penal costs on an annually basis in the Key Fact Statement (KFS).
Source: RBI
Lendingtech Startup Landscape in India

B2C Digital lending
Key Offerings: Digital B2C lending, BNPL, Secured lending, Unsecured lending, Instant loans, Payday loans, POS lending
Key Players:
B2B Neobanking
Key Offerings: Line of credit, Supply chain Financing, SMB lending, Invoice financing, Secured Lending Unsecured lending, Hybrid Lending,
Proxy lending
Key Players:
Fintech SaaS [Ecosystem Enablers]
Key Offerings: API based financial technology stack targeted towards the financial institutions, fintech companies and other commercial
businesses in India
Key Players:
Lendingtech Funding Ecosystem In India

$7 Bn total funding inflow between 2014 & Q3 2022
73% 3-year startup investment CAGR (2018 to 2021)
201+ funded Digital Lending Startups in India
$19 Mn mean ticket size of Digital Lending startup investments
$85 Mn total funding inflow at bridge stage between 2014 & Q3 2022
Delhi NCR top startup hub for Digital lending
$3.3 Bn total funding inflow at growth stage between 2014 & Q3 2022 startups in India in 2014& Q3 2022
$389 Mn total funding inflow at seed stage between 2014 & Q3 2022 Bengaluru, Delhi and Mumbai Attract 75% of
the investment in digital lending sector.
$3.2 bn total funding inflow at late stage between 2014 & Q3 2022
Lendingtech Startups Raised $7 Bn Across 471 Deals Between 2014 &

Q3 2022
2.50 100
2.00
75
Funding Amount ($ Bn)
1.50
Deal Count
50
1.00
25
0.50
0.00 0
2014 2015 2016 2017 2018 2019 2020 2021 Up to Q3 2022
Funding Amount ($ Bn) Deal Count

Source: Inc42
Lendingtech Startups Raised $320 Mn Across 17 Deals in Q3 2022

1000
750
Funding in $Mn
500
250
0
Source: Inc42
Growth in Lendingtech in India

400
300
Digital Lending in $Bn
200
100
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: EY
Lendingtech Funding: From Seed To Late Stage
Total Investments Average Ticket Size Notable Active Investors

(2014 to Q3 2022) ($ Mn)
Seed Stage $389 Mn $3 Mn Growx Ventures, Sunil Kalra,Ribbit Capital, Valar Ventures
Quona Capital, Ankur Capital, BLinC Invest, Prime Venture Partners,

Bridge Funding $85 Mn $2.4 Mn
Alteria Capital, Gokul Rajaram
Elevation Capital, Matrix Partners India, Kotak Mahindra Bank,

Growth Stage $3.3 Bn $18 Mn Franklin Templeton India, Quona Capital,iSeed
Zip Co Limited,FMO Entrepreneurial Development Bank,PayU,

Late Stage $3.2 Bn $34 Mn IFC,DCB Bank,WSV
Source: Inc42
Note: Inc42 includes the “Tech Stack” part of neobanking under “Fintech SaaS” sector. Hence those deals are not included in this analysis.
Lendingtech In Q3 2022: Indian Startup Funding
Funding Amount Deal Count

Change (QoQ) Change (QoQ)
Seed Stage -0.004 -45%
Going by the quarter-on-quarter growth

of all funding stages, it is clear that
Bridge Funding -58% 0% only Late stage has managed to
record both positive growth rates on
funding amount and Deal Count.
Growth Stage -76% -55%
Late Stage 67% 25%
Source: Inc42
Note: Both funding amount and deal count change is mapped based on comparison between Q3 2022 and Q2 2022
Top Lendingtech Startup Hubs In India

Total Funding Amount/
Notable Active Startups Notable Active Investors
Deal count
Burman Family Holdings,Uncorrelated Ventures,

Delhi NCR $1.9 Bn(145)
Fasanara Capital, SoftBank Ventures Asia, Naver
Anshu Jain,Bhupinder Singh, Kotak Mahindra Bank,

Mumbai $1.7 Bn(134) Franklin Templeton India,Ashok Goel,Ebix Inc
Alteria Capital, Gokul Rajaram,Tpg, Morgan Stanley,

Bengaluru $1.6 Bn(119) Bertelsmann India, Accel, Sequoia India
Chennai $619 Mn(20) Amazon, WSV, Sequoia, TVS Capital
Source: Inc42
Note: Inc42 includes the “Tech Stack” park of neobanking under “Fintech SaaS” sector. Hence those deals are not included in this analysis.
Notable Lendingtech Startup Investors In India

Company Name Deal Count Startups Invested
20
13
11
19
12
11
10
13
Source: Inc42
Most Funded Lendingtech Startups In Q3 2022

Company Name HQ Segment Funding Amount Notable Investors
Temasek, QED Investors, Sequoia Capital, Matrix Partners, Hummingbird,

Pune B2C $100 Mn Ocean View Investment
Mumbai B2C $97 Mn TPG Norwest, Norwest Capital, Piramal Capital and Housing Finance Limited
Varanium Nexgen Fintech Fund, DMI Sparkle Fund, Chiratae Ventures, Dream Incubator Japan,
Mumbai B2C $36 Mn
Sony Innovation Fund, InCred Capital, Haldiram's family office Total
Bengaluru B2C Banking $15 Mn Tiger Global, Elevation Capital, Matrix Partners India
Mumbai B2C Banking $10 Mn Accel, Nexus Ventures
LC Nueva AIF, Capital A, Sattva Family Office, Nitesh Damani, Nikhil Chandra Gupta, Anand Ladsariya,
Mumbai B2B $10 Mn Neeraj Goenka, Alok Agarwal, InCred Finance, Vivriti Capital, Caspian Impact
Financial Analysis Of India's Notable Lendingtech Startups

Company Name Founded In Total Revenue (FY22) Profits/Loss before Taxes (FY22) EBITA
2016 $21 Mn (-72%) -$0.9 Mn (+94.8%) $-16.3 Mn (-149%)
2013 $14.4 (-9.44%) -$2.21 Mn (+85.9%) -$1.8 Mn (+65%)
2013 $51.6 Mn (+96%) $4.05 Mn (+436%) $23.6 Mn (+7.37%)
2014 $1.6 Mn (+18.6%) -$5.8 Mn (+7.8%) +$10.8 Mn (+5%)
2020 $67.5 K -$0.325 Mn (-3847%) -$0.325 Mn (-3618%)

Comparison Of India's Notable B2B Lendingtech Startups
Founding Year Years In Operations Total Funding in $ Mn Key Offerings
2016 6 200 Credit solution to SMEs
2016 6 125 Unsecured loans to MSMEs
Loan for micro business,supply chain loan,ECLGS,

2013 9 267
trading business loan
2014 8 257 Working capital loans, Business loan, flexi loan tenure
collateral-free finance to businesses participating in

2015 7 255
international trade
Comparison Of India's Notable B2C Lendingtech Startups
2016 6 275 instant loan, Home loan, car loan, travel loan
2016 6 154 Salary Advances, Flexi Personal loan, Instant loan
2015 7 119 Travel loans, Pending bills, shopping
2015 7 92 BNPL
2015 7 82 Personal line of credit, flexible EMI

Comparison Of India's Notable B2B-B2C Lendingtech Startups In India

Personal Loans, Education Loans and SME Business

2016 6 303 Loans, Unsecured personal loans, Loans for first-time
buyers of affordable housing
2009 13 32 Business and personal loans
2018 4 125 Business and personal loans
2016 6 13 Loans to women, business
2008 14 113 Home loans, Personal finance, Marketplace for banks.

Lendingtech In India: SWOT Analysis
STRENGTH WEAKNESS OPPORTUNITY THREAT

Time Saving Not properly regulated Digital savvy population Rules and regulations
Large consumer base Indebtednes Emerging segment Cyberattack
Digital infrastructure Educated people Less capital intensive Competition
Cost saving Internet Access Large segment of working Trustworthiness

Population
No human biases Not properly integrated Not Integration with
with financial systems Young population traditional players
Less Error
Fraud Integrated financial ecosystem Unethical business practice
Easy to Use
Data privacy Tech revolution and Rise of AI Data privacy concerns
Reduced Human interaction
High Interest Rates More reachability Transparency
Efficiency
S W O T
Lendingtech In India: Emerging Trends
Young users can be the core target of B2C

lending Indian Digital lending market to grow at a
India’s young population can be a valuable asset to its digital-first fast clip
economy. About 47% of the Indian population is under 25, and most are
active internet users, adopting digitalisation en masse. As Gen Z or It is expected to grow 4.75x to $1.3 Tn in 2030 from $270 Bn in 2022. Global
zoomers enter the workforce, they tend to focus more on experiential investors are closely watching this space, and India will likely see more
engagement and need-based financial aid that will open a massive funding flow into this segment in FY24.
opportunity for digital lenders catering to niche requirements.
Sachet loans may drive the lending market Demand for digital gold loans is expected to rise
Sachet loans generally range between INR 500 and INR 10,000 and are
Although physical gold is the preferred asset in India, risk-free,
often sought by individuals looking for unsecured personal loans. India’s
no-storage-needed digital gold has gained traction as a reliable investment
relentless drive for financial inclusion across social strata and
option. The purchase of digital gold has increased by nearly xx% in
geographies means such small loans may help infuse credit access where
post-pandemic times, and the market for digital gold loans at lower interest
it is most needed. The coming years will continue to see a massive boom
rates is ripe for exploration. As it gets easier to convert digital gold to physical
in sachet loans as individuals from non-metro locations try to raise
gold, it will attract more users to buy or raise loans against these digital
small-cash loans for the short term.
assets.
Lendingtech In India: Key Challenges
Winning consumer trust, spreading awareness Frequent regulatory changes

Startups in the digital lending space are still struggling to create Fintech is a rapidly evolving sector, and the uncertainty around changing
trust among users, especially those from Tier 2 locations and rules and regulations makes it difficult for businesses to operate. A set of
beyond. A lack of awareness regarding digital products and guidelines for digital lenders have reduced much of the volatility. But there
people’s preference for in-person communications have pushed are still concerns about the nitty-gritty, and it is expected that the RBI will
fintechs to adopt an omnichannel approach. soon release another set of guidelines.
Tech mismatch between legacy FIs and fintechs

Rise of cybercrimes
The legacy technology stack at traditional financial institutions like banks
may not be compatible with the new-age technology used by digital With the increase in digitalisation, there has been observed a rise in the
lending platforms. This makes it difficult for digital lenders to unlock the number of cybercrimes. The Digital lending startups are required to step up
full potential of their partnerships with the traditional ecosystem. their investments and efforts when it comes to cybersecurity and data theft.
Public Fintech Startup Stocks In India Have Witnessed Massive Price

Setback Since their IPO
20%
0%
Daily stock price change %
-20%
Two fintech heavyweights

-40%
Paytm and PolicyBazaar
-60% have eroded 65% vand
63.60% of their total
-80% market capitalisation
Dec 2021 Mar 2022 May 2022 Jul 2022 Sep 2022 Nov 2022 since IPO
LTP (YTD) Price diff. (YTD) % change
One97 Communications (Paytm) ₹539.75 -₹1,021.05 65.42%
Fino Payments Bank ₹240.30 -₹303.60 55.82%
PB Fintech Ltd (Policybazaar) ₹485.00 -₹847.35 63.60%
Source: NSE, Inc42 calculations

Note: The latest stock market data used in this slide is as on 22 September 2022.
Fintech In India: Emerging Trends
The growing importance of user consent & data

privacy
Momentum in insurtech, investment tech
From storing the financial data of Indian citizens on domestic servers to
Among the four major fintech sub-segments, including lendingtech, payments,
making consent mandatory for recurring payments above INR 5,000, the
insurtech and investment tech, the last two saw more funding deals compared
government has lately implemented many stringent measures to
to their peers. The three-year CAGR (2018-2021) for insurtech deals stood at
safeguard data privacy across the country’s fintech ecosystem. The new
62%, followed by investment tech (58%), payments (23%) and lending (9%).
Digital Personal Data Protection Bill (2022) is further expected to focus on
data safety, product quality and value creation.
ONDC-UPI to reshape growth Focus on bridging the urban-rural divide

Open Network for Digital Commerce (ONDC) is an initiative by the Indian With the rise of a digital-first economy, fast spreading across Tier 3 and 4
government to create an open-source ecommerce technology platform. cities, fintech startups now aim to solve rural India's challenges. Together,
The aim is to democratise digital commerce for SMBs selling their fintechs and legacy banks are working on a phygital model to increase
products online. As the UPI remains a core element of this open-source financial inclusion. Additional initiatives by the government, such as
tech stack, the fintech component will help drive ONDC and the digital observing Financial Literacy Week, will further empower rural fintechs and
commerce ecosystem, leading to collaborative growth. drive the momentum for financial literacy and inclusion.
www.inc42.com Credits
Inc42 is India’s largest tech media & information platform on a ANALYST
mission to build & serve India’s tech, startup & internet economy. Saiflan Aijaz, Sandeep Singh, Meha Agarwal
From breaking the latest news to discovering the hottest startups, EDITOR
from spotting upcoming trends to simplifying complex concepts, we Sanghamitra Mandal
cover everything tech in India’s internet economy.
DESIGNER
Born in January 2015, Inc42 has become the leading source for news Sabith
& analysis on India’s rapidly growing tech, startup & internet economy.
Inc42, with over 30,000+ published stories, 50+ research reports, 100+
conferences & events & having featured 1000s of entrepreneurs, now
ADDRESS
reaches over 25 Mn+ tech leaders & professionals every month.
Inc42 Media, 59/16, 4th Floor, Jujhar Tower,
RD Marg, Kalkaji, New Delhi, Delhi 110019
Contact: editor@inc42.com
Disclaimer
The data provided in this report has been obtained from public and private sources. We have made every attempt to ensure that the information presented in
this report is accurate and free from any discrepancies. Ideope Media Pvt Ltd, the parent company of Inc42 Media and Inc42 DataLabs, is not responsible for
any inaccuracy in the information presented or for any damages caused by the use of information provided in this report. In case of any discrepancy or errors
in the data, you can contact us at editor@inc42.com and we will try our best to update the information in the digital version of the report. We are constantly
updating our database of startups due to new person using or relying on any information in this publication.
This report has been prepared in good faith on the basis of information available at the date of publication without any independent verification. Ideope Media
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State Of Indian

04 Fintech Market In India: A Snapshot Global vs Indian Lendingtech

Market Size Lendingtech Opportunity In India: B2B and B2C

Market Size Across Sub-Sectors

27 Fintech In India: Key Developments

India’s Digital Economy In A Nutshell

$0.68 4.7 Hours 305 Mn+

Per GB Internet Average Hours Spent Users Doing Online

Cost In India On Mobile Per Day Transactions In

$131 Bn+ $2.7 Tn 373 Mn+

Source: Statista, NPCI, Bain & Company, App Annie

Market Opportunity Venture Capital Unicorns & Soonicorns

Market Opportunity Total Funding Unicorns In

CAGR Funding CAGR Soonicorns In

The Most Lucrative Active Fintech Combined Valuation

Market Opportunity Funded Fintech Combined Valuation

India’s Fintech Landscape: Key Players

Fintech Market Opportunity In India: Lendingtech is the most lucrative

Various socio-economic factors such as growing

Source: Multiple secondary source, Inc42 calculations

India’s Fintech Startup Landscape: Who’s Who In Subsectors

Key Growth Drivers: Fintech In India

Source: EPFO India, World Bank, ET, Ookla, Inc42

Global Fintech Startup Ecosystem Comparison: Indian Fintech Startup

Total Fintech Funding (2014 - Q3 2022) $24 Bn $96 Bn $241 Bn

Startup investment CAGR (2016 to 2021) 57% 12% 72%

Number of fintech unicorns 22 13 132

Average ticket size of startup investment 2021 $27 Mn $29 Mn $22 Mn

Top 10 Biggest Fintech Startup Funding Rounds In Q3 2022

Mumbai Lendingtech Growth Stage $90 Mn MAJ Invest, Fasanara Capital

Chennai Lendingtech Late Stage $55 Mn Lightrock India, Creation Investments

Indian Fintech Startup Ecosystem: 2022

Q3 2022 Q2 2022 Q1 2022

Total Funding $816 Mn $1.78 Bn $1.77 Bn

Mergers & Acquisitions 5 7 7

Average Ticket Size Of Investment $15 Mn $24 Mn $25 Mn

Indian Fintech Startups Have Raised $24 Bn Since 2014

Funding Amount ($ Bn) Deal Count

Fintech Startups Raised $816 Mn Across 58 Funding Deals In Q3 2022

Funding Amount ($ Mn) Deal count

Fintech In Q3 2022: Sub-sector Wise Venture Capital Inflow Split

Total Funding Deal Count

Fintech Funding Showed A 68% Fall In Q3 2022

After Reaching Its Peak In Q4 2021, Fintech Average Ticket Size

Fintech In Q3 2022: Stage Wise Venture Capital Inflow

Funding Amount YoY Change Average Ticket Size YoY Change

Seed Stage $109 Mn -12% $4.5 Mn -5%

Bridge Funding $20 Mn -30% $2.8 Mn -50%

Growth Stage $224 Mn -78% $20 Mn -56%

Late Stage $463 Mn -66% $42 Mn -48%

Bengaluru $9 Bn 223 117% 888+

Delhi-NCR $8.6 Bn 152 56% 611+

Mumbai $4.01 Bn 172 25% 609+

Chennai $1.03 Bn 31 26% 133+

Hyderabad $461 Mn 23 89% 65+

Pune $396 Mn 23 107% 33+

Ahmedabad $261 Mn 8+ Not Applicable 18+

Bengaluru, Delhi-NCR & Mumbai Others

Bengaluru Remains Top Destination For Fintech Startup Funding In Q3 2022

0 5 10 15 20 0 100 200 300

Deal Count Funding in $Mn

105 Mergers & Acquisitions Recorded In Indian Fintech Startup Ecosystem

Mergers & Acquisitions In Indian Fintech Startups Peaked From 2021