India’s fintech sector saw equity funding plunge 26 per cent to USD 889 million in the first half of 2025 compared to USD 1.2 billion in the second half of 2024, according to Tracxn’s India fintech H1 2025 report.
The report attributed the decline to cautious investor sentiment and a slowdown in late-stage funding, even as early-stage investments showed modest gains. Compared to H1 2024, funding dropped 5 per cent from USD 936 million, highlighting persistent headwinds for the sector.
Seed-stage funding fell sharply by 27 per cent to USD 91.2 million from USD 126 million in H2 2024 and 33 per cent from USD 137 million in H1 2024. In contrast, early-stage funding rose 10 per cent sequentially to USD 361 million, up from USD 329 million in H2 2024, and 9 per cent year-on-year.
Late-stage funding saw the steepest decline, dropping 41 per cent to USD 437 million compared to USD 745 million in H2 2024, and 6 per cent from USD 467 million in H1 2024.
“The funding winter continues for late-stage fintechs as investors remain cautious amid global macro uncertainties,” Tracxn said.
Only one new unicorn emerged in H1 2025, the same as H2 2024, while no unicorns were created in H1 2024. IPO activity remained muted with no companies going public in the first half of 2025.
India’s fintech sector witnessed 16 acquisitions, a 6 per cent decline from H2 2024 but a 45 per cent rise compared to 11 acquisitions in H1 2024. The largest deal was Groww’s USD 150 million acquisition of Fisdom, followed by InCred Money’s USD 35 million purchase of Stocko.
Bengaluru-based fintech firms accounted for 55 per cent of total funding, underscoring the city’s dominance. Mumbai followed with 14 per cent of funding.
Peak XV Partners, AngelList, and LetsVenture emerged as the top overall investors in H1 2025. Blume Ventures, Venture Catalysts, and 100Unicorns led seed-stage investments, while Peak XV Partners, Accel, and Bessemer Venture Partners topped early-stage deals. SoftBank Vision Fund, Lathe Investment, and Sofina were the most active late-stage investors.
US-based Accel led all venture capital firms with 34 investments, while India’s Blume Ventures added seven new companies to its portfolio in H1 2025.
The report noted that the number of funding rounds fell to 109 in H1 2025 from 195 in H2 2024, a 44 per cent drop. First-time funded companies decreased 41 per cent to 32, and new additions to the ‘Soonicorn’ club plunged 75 per cent to just three.
Despite these declines, average time from first funding to acquisition improved to 8.8 years from 18.8 years, suggesting faster exits. However, average funding raised before acquisition fell from USD 1 billion to USD 12.3 million.
Tracxn warned that rising investor caution and fewer first-time backers, down 30 per cent on a half-yearly basis, could weigh on India’s fintech growth in the near term.
Source: https://www.businessworld.in/
