<p>Bengaluru: Total funding in financial technology (fintech) startups dropped by 35% year-on-year (YoY) to $366 million in the January to March quarter (Q1) of 2025, according to a report by data intelligence platform Tracxn out on Tuesday. In the same period of 2024, $571 million had been raised for the sector.</p>.<p>In fact, after the startup funding peak of 2021, fintech funding has steadily declined with minor spikes in Q1 2023 and Q3 2024, said the report. It attributed this to factors such as macroeconomic challenges and geopolitical headwinds. Plus, large fintech deals, which typically drove overall funding volumes, were absent in Q1 2025. One factor driving this is the fintech landscape becoming more crowded.</p>.<p>Market saturation has intensified competition among startups, reducing returns on investment and making investors hesitant to commit funds to new ventures. Q1 this year saw only 10 companies securing first-time funding, compared to 29 in the same quarter in 2024. Sequentially, however, the quantum of funds raised by the segment did not see much change with $365 million drawn in the October-December quarter.</p>.Future of Finance? RUGR Will Have the Answers at Fintech India Expo 2025.<p>There were also 10 acquisitions in this space over the quarter, more than what was seen the previous quarter and YoY.</p>.<p>One marked shift has been that the majority of the funding in this space has been seen in the late-stage rounds. Late-stage funding was $227 million, witnessing a 47% increase sequentially, but a 21% decrease YoY.</p>.<p>Simultaneously, early-stage funding saw a YoY drop by 56% to $92.6 million in the quarter. Sequentially also, funding decreased by 41%. Seed-stage funding also saw a fall, though not as heavy. With $45.9 million raised, this marked a 39% decline YoY and a 16% dip sequentially.</p>.<p>The sectors seeing the most funds were banking tech, internet-first insurance platforms, and investment tech, primarily because of single companies in each segment accounting for the majority of the funding.</p>.<p>Bengaluru led the fintech funding in India, followed closely by Gurugram and Mumbai. Globally, India ranked third in terms of funding raised for the fintech sector in Q1, following the US and the UK.</p>.<p>Peak XV Partners, Angel List, and LetsVenture were the leading investors in the sector.</p>.<p>Neha Singh, co-founder Tracxn, said that 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.</p>
<p>Bengaluru: Total funding in financial technology (fintech) startups dropped by 35% year-on-year (YoY) to $366 million in the January to March quarter (Q1) of 2025, according to a report by data intelligence platform Tracxn out on Tuesday. In the same period of 2024, $571 million had been raised for the sector.</p>.<p>In fact, after the startup funding peak of 2021, fintech funding has steadily declined with minor spikes in Q1 2023 and Q3 2024, said the report. It attributed this to factors such as macroeconomic challenges and geopolitical headwinds. Plus, large fintech deals, which typically drove overall funding volumes, were absent in Q1 2025. One factor driving this is the fintech landscape becoming more crowded.</p>.<p>Market saturation has intensified competition among startups, reducing returns on investment and making investors hesitant to commit funds to new ventures. Q1 this year saw only 10 companies securing first-time funding, compared to 29 in the same quarter in 2024. Sequentially, however, the quantum of funds raised by the segment did not see much change with $365 million drawn in the October-December quarter.</p>.Future of Finance? RUGR Will Have the Answers at Fintech India Expo 2025.<p>There were also 10 acquisitions in this space over the quarter, more than what was seen the previous quarter and YoY.</p>.<p>One marked shift has been that the majority of the funding in this space has been seen in the late-stage rounds. Late-stage funding was $227 million, witnessing a 47% increase sequentially, but a 21% decrease YoY.</p>.<p>Simultaneously, early-stage funding saw a YoY drop by 56% to $92.6 million in the quarter. Sequentially also, funding decreased by 41%. Seed-stage funding also saw a fall, though not as heavy. With $45.9 million raised, this marked a 39% decline YoY and a 16% dip sequentially.</p>.<p>The sectors seeing the most funds were banking tech, internet-first insurance platforms, and investment tech, primarily because of single companies in each segment accounting for the majority of the funding.</p>.<p>Bengaluru led the fintech funding in India, followed closely by Gurugram and Mumbai. Globally, India ranked third in terms of funding raised for the fintech sector in Q1, following the US and the UK.</p>.<p>Peak XV Partners, Angel List, and LetsVenture were the leading investors in the sector.</p>.<p>Neha Singh, co-founder Tracxn, said that 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.</p>
