Tech kept the world moving in 2020. Amid a pandemic and a lockdown, tech became a bigger enabler for most industries, including financial services.
Still, fintech, an overarching term covering segments ranging from payments, digital lending, insurance and cryptocurrencies among others, did not emerge unscathed from the Covid-19 crisis. Value and volume of funding for Indian fintech firms dropped in 2020 but the large got larger as money chased fewer, more established businesses.
Venture capital funding flows into Indian fintech startups halved to $1.4 billion in 2020, compared to $2.8 billion in the previous year, according to data from Venture Intelligence that tracks deals. The number of companies that raised funding this year also dropped to 91 from 127 a year ago.
At these levels, the value of deals was the lowest since 2016.
This, according to Fali Hodiwalla, partner – financial services and consulting at advisory firm EY, was mainly because venture capital investors were being more discerning and leaning towards fintech startups that have a clear path to profitability, especially as they looked to conserve capital during the ongoing pandemic.
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