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August 24, 2016

What's Next for Fintech?

Data from the Venture Intelligence Venture Capital Deals Database shows that, even in 2015, when E-Commerce/Online Retail was ruling the roost (grabbing over 45% of the investments), Fintech investments had accounted for as much as 15% of the VC investment pie.

An Economic Times survey of VCs published last week found Fintech to be the most favoured sector for investments in the next 6 to 12 months. Venture Intelligence data shows that Fintech investment have been picking up after falling for two quarters following the high in Q3'15. Clearly, this is one sector where VCs are becoming more and more comfortable to deploy their "dry powder" (or uninvested capital). 


Among the most active VC investors in the sector include Accel India (MoneyView, Quiklo, Scripbox), Sequoia Capital India (Mobikwik, Cleartax) and Kalaari Capital (CreditVidya, Active.ai). Social VC or Impact Investors are also enthusiastic with Aspada Investments picking up stakes in NeoGrowth and CapitalFloat and Omidyar Network in Scripbox and NeoGrowth.



Significant startups in fintech sectors which raised funding in H1'16 include:

1. Payments: ftcash, Mobikwik and QwikCilver

2. Marketplaces for Mutual Funds & Insurance products:  Scripbox, EasyPolicy, TurtleMint

3. SME Lending: LendingKart, NeoGrowth (apart from Capital Float, which owing to it being originally founded in 1993, technically does not qualify as a startup).



What's Driving the Fintech Momentum?

With much dissatisfaction against incumbent lending institutions and large gap between formal lending supply and credit demand in the country, VCs seem poised to invest heavily in disruptive startups of all flavours - B2B, B2C and P2P - in the lending segment .


With the Microfinance crisis fresh in memory, VCs have not been too venturesome in backing peer-to-peer lenders thus far. Even though it has not been without criticism, the fact that the RBI has put out a consultation paper on P2P lending seems to have eased fears on any ham-handed action. The Government of India for its part has been putting in several enabling infrastructure elements in place - including Aadhaar, JAM Scheme (pdf), Unified Payment Interface (pdf), etc - that Fintech companies, along with other players, can exploit.

What do you think is the future for Fintech in India? Chime in the comments.

To track Deal Action in the Fintech space


Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.