Venture capital-backed investments in India’s fintech sector outpaced those in China in the first quarter of 2020 in terms of both deal value and volume, according to data and analytics company GlobalData.
The global economic turmoil caused by covid-19 has diminished the investment appetite for fintech startups in 2020. China, in particular, has been hit hard by the pandemic.
Over the last two years, China’s fintech startup ecosystem survived as the breeding ground for VCs. However, the trend reversed with Indian fintech startups attracting more investment in the March qurater.
“In Asia, though there is an overall pullback in VC funding of fintech startups in Q1 2020, India grabbed the top spot as China was hit by the pandemic-induced economic recession” said Ayushi Tandon, fintech analyst at GlobalData.
Startups in the payments and lending sectors led the number of investments in India, whereas China’s deals were more in cross-sector fintech startups. Fintech startups in the analytics tech area represented the highest number of deals in India as well as China.
In February BharatPe, a New Delhi-based startup that is helping merchants to accept digital payments for the first time and also providing them with access to working capital, raised $75 million in a new financing round. In March, fintech startups Veritas Finance and Bengaluru-based Juspay raised $46.99 million and $21.6 million, respectively. Earlier in January, MoneyTap, a consumer lending company, raised $70.26 million in Series B funding.
Analytics, too, has been a big growth area, and will be heavily in demand as lenders want alternative credit history tools for small businesses. The upside for fintech is that India is an under-penetrated market, say experts. Half a billion people are still not quite financially included, and the other half billion have a long way to go in consuming digital products.
“I wouldn’t be worrying about competing with China on fintech — both are big markets; China much bigger, India with higher growth potential. Despite the covid-19 disruption, China remains huge, but it’s far better penetrated—their top payments platform Alipay and WeChat have nearly 900 million and 1 billion users, respectively,” said Prasanto K Roy, tech policy consultant.
This article was first published on livemint.com.