An up-rise in venture capital-backed investments in India’s fintech sector was observed during the first quarter of 2020. It managed to outpace the same in China in terms of both deal value and volume, as reported by GlobalData, a data and analytics company.
Covid-19 has bought about immense stress to the entire economy. This has pretty much dwindled the appetite for making fresh new investments in the investor community. China for the most part was one of the hardest hit during the pandemic.
China’s fintech startup ecosystem used to be the preferred investment option for VCs, but this changed when Indian startups came into the picture, the trend reversal from China to India was quite notable in this March quarter.
Ayushi Tandon, fintech analyst at GlobalData said that “The top spot was taken by India as China was hit by an economic recession due to the pandemic, although there was an overall reduction in VC funding in Q1 2020,”.
More than $330 million worth of VC investments were injected into Indian fintech startups in the March quarter against China’s roughly $270 million. India had 37 deals as compared to only 26 deals in China.
India attracted a greater number of investments in the payments and lending sectors, on the other hand China’s deals were concentrated in the cross-sector fintech startups. Analytics tech-based fintech startups saw some of the highest numbers of deals in India as well as China.
BharatPe, a New Delhi-based startup raised approx. $75 million in a new financing round In February, they help merchants to adapt to digital payments and also provides them with working capital. Fintech startups Veritas Finance and Bengaluru-based Juspay raised $46.99 million and $21.6 million in March., MoneyTap, a consumer lending company, raised $70.26 million in Series B funding earlier in January.
In the Fintech space, India has been on a growth trajectory for some years now which was mostly driven by payment systems like UPI, that’s not all, it has gained further as the move to digital and contactless payments has skyrocketed during the lockdowns.
Another big growth area is in analytics and it is expected to be in high demand as lenders want alternative credit history tools for small businesses. The biggest advantage for fintech lies in the fact that India is still an under-penetrated market, say experts. There’s still at least half a billion people who are not quite financially included yet, and the other half billion has quite a long way to go in consuming digital products.
China was one of the first to be hit by the implications of COVID-19, the effect rapidly spread across the globe, including India. The entire economy has a gloomy future in the making as no solid estimates as to how and when the economy can recover from this pandemic can be made.
