Credit card challenger Slice’s announcement on Monday about becoming a unicorn after raising $220 million has once again brought the country’s fintech space, especially the payments sector, into the limelight.
With new innovations and a huge untapped market, fintechs, most prominently in the payments space, have been on a fund-raising spree, even though some companies have faced mixed fortunes when listing on the bourses.
A recent report by S&P Global Market Intelligence revealed that payment fintechs continue to draw in the lion's share of fintech funding in Asia-Pacific, contributing seven out of the 10 largest transactions in the third quarter.
“While consumer-facing payment apps have dominated funding into the payment sector in the past, business-to-business payment fintechs have been attracting more investor-attention of late. Four of the largest transactions were raised by B2B-focused payment companies,” said the Q3 APAC Fintech Funding Report, noting that investors were drawn to firms facilitating digital payment acceptance for merchants and fintechs offering cross-border payment solutions to businesses.
Investments in privately held fintech firms
Overall, investments in privately held financial technology companies based in Asia-Pacific surged 68 per cent sequentially to $5.47 billion in the third quarter, notching a new quarterly high since the first quarter of 2019, it further said.
The fund-raise by PineLabs is in fact the top transaction.
“There is a lot of interest in fintech, not just in India but across the world,” said Deepak Gupta, Founding Partner, WEH Ventures.
India has traditionally been an under-banked country but with government efforts on bank account opening, start- ups used these rails to create new models, he said, adding that in the payments space, UPI proved to be a game changer.
The sector is set to see a further push with the Reserve Bank of India expected to introduce a framework for carrying out retail digital payments in offline mode across the country, according to experts.
Investor-interest in the sector is also evident by the sharp rise in the number of companies attaining unicorn status.
A recent report by PwC India titled “Startup Perspectives - Q3CY21” revealed that the fintech sector registered investments worth $2.4 billion for 53 closed deals in the third quarter of 2021 across various stages of investment.
Six companies in the fintech and payments sector had attained unicorn status including merchant payments fintech BharatPe, banking tech firm Zeta and CRED.
India at present has only two decacorns in the private market sector, one of which is from the payments space – Paytm. The other is Byju’s.
A decacorn is a company that is valued at more than $10 billion, according to the report and at present, 38 private start-ups have attained the decacorn status.