State Of Indian Fintech Report, Q2 2022

State Of Indian Fintech Report Q2 2022 InFocus

Insurtech

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Table Of Contents

UPI Transactions: Outlook The State Of Cryptocurrency In India Recurring Payments & The Bottlenecks 29

THE STATE OF FINTECH UNICORNS & SOONICORNS IN INDIA

4

FINTECH MARKET IN INDIA: A SNAPSHOT

The List

5

INDIA’S FINANCIAL SERVICES: KEY STATISTICS

Revenue Analysis

7

INDIA’S FINTECH OPPORTUNITY

10

INDIA’S FINTECH LANDSCAPE: KEY SEGMENTS & STARTUPS

12

FINTECH FUNDING TRENDS

The State Of Fintech IPOs 39

20 EARLY STAGE INDIAN FINTECH STARTUPS MAKING WAVES

44

INFOCUS: INSURTECH IN INDIA Landscape & Market Opportunity

Deals & Amount

Competitive Scenario

Fintech Startups That Bagged Biggest Funding Rounds In Q1 2022

Key Areas Of Focus For Insurtech Startups

Key Fintech Acquisitions In Q1 2022

Factors Contributing Towards The Growth Of Insurtech In India

Fintech Funding Funnel

Insurtech Funding Trends

Average Ticket Sizes

Top 10 Funding Rounds In Indian Insurtech Segment

Stage & Geographic Breakdown

Most Active Investors

Most Funded Segments Within Fintech 22

KEY DEVELOPMENTS OF Q1 2022 WhatsApp Pay Rollout

58

FINTECH TRENDS TO WATCH OUT FOR

60

KEY CHALLENGES AHEAD OF INDIAN FINTECHS

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India’s Digital Economy In A Nutshell

1,343

1,310

1,273

1,132

1,186

1,134

1,075

1,008

932

1,000 846

Internet Users (Mn)

1,500

1.3 Bn+

61%

44%

Internet Users By 2030

Internet Penetration In India

Increase In Internet Users From 2022 To 2030

$0.68

4.7 Hours

305 Mn+

Per GB Internet Cost In India

Average Hours Spent On Mobile Per Day Per User

Users Doing Online Transactions In India

98 Bn+

$2 Tn+

373 Mn+

Total No. Of UPI Transaction As On May 2022

Total Value Of Upi Transactions As On May 2022

Estimated Rural Internet Users In 2022

500

0

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Source: Statista, NPCI, Bain & Company, App Annie Note: * indicates data is till September 30, 2021

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Fintech Market In India: A Snapshot Market Opportunity $1.3 Tn

Market Opportunity (2025)

31%

CAGR (2021 to 2025)

61%

Internet Penetration In India (2021)

4.2%

Insurance Penetration In India (FY21)

Venture Capital $22 Bn

57%

Total Funding (2014 to Q1 2022)

Funding CAGR (2016 to 2021)

4.2K+

Active Fintech Startups In India

550+

Funded Fintech Startups

Unicorns & Soonicorns 21

Unicorns In India

31

Soonicorns In India

$64 Bn

Combined Valuation Of Unicorns

$12 Bn+

Combined Valuation Of Soonicorns

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India’s Financial Sector: Key Statistics 98 Bn+

Total No. Of UPI Transactions As Of April 2022

2X

Increase In Value Of Mutual Fund Asset Under Management Since 2015

89.7 Mn+

Active Demat Accounts In India

$2 Tn+

Total Value Of UPI Transactions As Of May 2022

44 Bn+

Total No. Of Digital Transactions Recorded During FY21

$11.5 Bn

Total Value Of Investment In Equities By Retail Investors In 2021

$514 Bn

Value Of Mutual Fund Asset Under Management As Of May 2022

62 Mn+

Total No. Of Credit Card Users As Of FY21

14.3 Mn

New Investors Added In FY21

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India To Reach A Trillion-Dollar Fintech Market In 2025 The country's fintech market is estimated to grow at a CAGR of 31% during 2021-2025 1500 $1,300

+2.2X $990

Market Size ($ Bn)

1000 $758 $584 500

0

$435

2021 Neo-Banking

Source: Inc42, Secondary Research

2022 Fintech SaaS

2023 Insurtech

Investment Tech

2024 Lendingtech

2025 Payments

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Fintech Market Opportunity In India To Increase 2.2x In The Next Three Years Lendingtech to remain the dominant subsector in the Indian fintech market

48 (8.2%)

97 (7.5%)

87 (14.9%)

208 (16.0%)

$584 Bn 2022

$1.3 Tn 2025

270 (46.2%)

339 (26.1%)

165 (28.3%)

Lendingtech Source: Inc42, Secondary Research

Payments Investment Tech

616 (47.4%)

Insurtech Fintech SaaS

Neobanking

Lendingtech

Payments Investment Tech

Insurtech Fintech SaaS

Neobanking

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Even today less than 15% of India’s 1.3 Bn population is truly catered to by the financial services sector. Given the fact that we are an emerging economy, it makes fintech a mammoth opportunity. Jan Dhan accounts and the digital payment framework in India are a blessing for Indian startups and leveraging fintech to cross sell products has made it a crucial revenue model for today’s generation of entrepreneurs.

Raman Roy Cofounder, Indian Angel Network I Founder, Quattro

India’s overall fintech market opportunity is estimated to be $1.3 Tn by 2025, growing at a CAGR of 31% during 2021-2025. Of this, lending tech is likely to account for 47% ($616 Bn), followed by insurtech at 26% ($339 Bn) and digital payments at 16% ($208 Bn). As Indian retail slowly recovered from the Covid-19 pandemic in 2021, the buy-now-pay-later (BNPL) model under lending tech saw a quantum leap, thanks to digital-savvy consumers. The BNPL space is estimated to offer a $43 Bn market opportunity by 2025, growing at an 80% CAGR due to the early nature of the market.

Ankur Bansal Cofounder & Director, BlackSoil

This is the greatest time fintech has seen in India and it is the best time to start a new venture in this space. Every company is eventually becoming a fintech company and the company’s ability to build the new solutions will be the the key differentiator here. Insurtech being a fragmented market, offers a huge opportunity to digitise the entire process both on the consumer and the business side

Shashank Randev Founder VC, 100X.VC

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While payments and alternative finance have been major growth drivers of this industry so far, distribution-led models in WealthTech, InsureTech, and lending companies have started bringing about inclusion and expanding the reach of financial products to the masses. India stack is playing a pivotal role in digitisation and there are strong infra players emerging out of the start-up ecosystem to bring about innovation in the way people transact. Internet/mobile penetration in recent years has helped improve reach but there is still a need to customize products for increased adoption and figure out cost-effective ways of hyperlocal delivery.

Swati Murarka Vice President, Athera Venture Partners

We are still at the ground floor in terms of creating large sustainable fintechs for different target segments in the country which are underserved and underbanked. Today's modern tech enabled lifestyle is questioning the branch based and person based banking model for discovery, advice, service and grievance redressal on financial products. Embedded finance is the next big play in india where availability of proprietary data in any sector can lead to associated fintech products or platforms

Anup Jain Managing Partner, Orios Venture Partners

The coming years would see nations all around the world looking at the possibility of launching and examining a pilot program for their national digital currency. There's a good chance that 2022 will be the year when other countries create their own CBDCs. This year NFT will also continue to be a prominent topic and will disrupt the gaming, art, and creative industries, among others. Last but not the least, advancements in the Web 3.0 space and metaverse starting to pick up momentum, the industry has head room to scale and grow for over a decade.

Sumit Gupta CEO & Co-Founder, CoinDCX

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India’s Fintech Landscape: Key Segments

$5.4 Bn

Total Funded Startups

160+

Market Opportunity

$9.2 Bn

Total Funding Amount

Home Loan

Trade Finance

Education Loan

Payday Loan

Credit cards

Personal Loan

P2P Lending

Cryptocurrency exchange International stock market investing

Total Funded Startups

Fractional Real Estate Investments

50+

$87 Bn

Total Funding Amount

$4.6 Bn

Total Funded Startups

30+

Open Banking API Payment aggregator APIs Credit risk management Insurance risk management

$165 Bn

Total Funding Amount

$9 Bn

Total Funded Startups

70+

Market Opportunity

Online trading

$901 Mn

Market Opportunity

Fintech SaaS

SMB Loans

Market Opportunity

Payments

Total Funding Amount

Automobile Loan

Insurtech

$270 Bn

Buy Now Pay Later (BNPL)

$87 Bn

Total Funding Amount

$1.8 Bn

Total Funded Startups

40+

Payment gateway Mobile wallet UPI apps Remittance Prepaid cards

Digital Broker Insurance SaaS Corporate Insurance Broker Digital Insurance Underwriter Health Clubs

Market Opportunity

Neobanking

Investment Tech

Lendingtech

Market Opportunity

$48 Bn

Total Funding Amount

$326 Mn

Total Funded Startups

15+

Consumer banking Commercial banking

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India’s Fintech Startup Landscape Payments

Lendingtech

Investment Tech

Insurtech

Neobanking

Fintech SaaS

Cryptocurrency

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Fintech Startups That Bagged Biggest Funding Rounds In Q1 2022 Company Name

Funding Stage

Funding Amount

Lendingtech

$200 Mn

Late Stage

Payments

$150 Mn

Growth Stage

Lendingtech

$137 Mn

Growth Stage

Neobanking

$100 Mn

Late Stage

Investment Tech

$86 Mn

Late Stage

Lendingtech

$82 Mn

Growth Stage

Lendingtech

$76 Mn

Late Stage

Lendingtech

$75 Mn

Late Stage

Fintech SaaS

$70 Mn

Late Stage

Fintech SaaS

$56 Mn

Late Stage

Sub-Sector

Notable Participating Investors

Ocean View Investments Group

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Key Fintech Acquisitions In Q1 2022 Company Name

Sectors

Funding Stage

Notable Investors

Fintech SaaS

Growth Stage

Lendingtech

Growth Stage

Fintech SaaS

Bootstrapped

Bootstrapped

Payments

Bootstrapped

Bootstrapped

Payments

Growth Stage

Lendingtech

Growth Stage

Investment Tech

Seed Stage

Fintech SaaS

Bootstrapped

Bootstrapped

Acquired By

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Fintech Startup Investment Trends: A Snapshot $22 Bn

551

Venture capital raised between 2014 And Q1 2022

Funded fintech startups in India

$76 Bn+

$22 Mn

Combined valuation of fintech unicorns and soonicorns

Bengaluru is the top fintech startup destination in India

Average ticket size of fintech investments in Q1 2022

Notable Investors

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Fintech Funding Funnel 77

Number Of Late Stage Startups

201 351

Number Of Growth Stage Startups

Number Of Seed Stage Startups

551 4,270

Total Funded Startups

Total Active Startups

Note: This is on the basis of number of startups funded during 2014-2021 Source:Inc42 Plus

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$22 Bn+ Raised By Indian Fintech Startup Since 2014 Both the funding amount and deal count has increased 155% and 50% respectively 8.0

300

200 Deal Count

Funding Amount ($ Bn)

6.0

4.0 100 2.0

0.0

2014

2015

2016

2017

2018

Funding Amount ($ Bn) Source: Inc42 Note: 2022 date till 31st May 2022

2019 Deal Count

2020

2021

2022 (Up to May)

0

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Deal Count Across All Funding Stage Witness An Upsurge Compared to the previous year late stage (80%), seed stage (29%) and growth stage (19%).

100%

Deal Count

75%

50%

25%

0%

Q1 2021

Q2 2021 Seed Stage

Q3 2021 Late Stage

Growth Stage

Q4 2021 Bridge Stage

Q1 2022

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Venture Capital Inflow Across All Funding Stage Witness An Upsurge Compared to the previous year growth stage (343%), late stage (79%) and seed stage (103%).

100%

Funding Amount ($ Mn)

75%

50%

25%

0%

Q1 2021

Q2 2021 Seed Stage

Source: Inc42

Q3 2021 Late Stage

Growth Stage

Q4 2021 Bridge Stage

Q1 2022

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$25 Mn Average Ticket Size Of Fintech Funding In Q1 2022 Compared to the previous year the average ticket size of venture capital investment in fintech startups surged 60% 50

Average Ticket Size ($ Mn)

40

30

20

10

Source: Inc42

2 Q1

-2

02

1 Q4

-2

02

1 Q3

-2

02

1 Q2

-2

02

1 Q1

-2

02

0 Q4

-2

02

0 Q3

-2

02

0 Q2

-2

02

0 Q1

-2

02

9 Q4

-2

01

9 Q3

-2

01

9 Q2

-2

01

9 Q1

-2

01

8 Q4

-2

01

8 Q3

-2

01

8 01 -2 Q2

Q1

-2

01

8

0

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Bengaluru

Delhi NCR

Mumbai

Bengaluru Funding Amount

Deal Count

Bengaluru & Delhi NCR Spearheading The Fintech Revolution In India

Delhi NCR

Chennai

Chennai

Mumbai

Hyderabad

Pune

0

10

20 Deal Count

Source: Inc42

30

0

200

400 Funding Amount ($ Mn)

600

800

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Insurtech Is The Fastest Growing Fintech Segment In India The rapid adoption of non-life insurance covering health, education, vehicle and other areas will spearhead the growth of insurtech for the next three years

Insurtech Investment Tech Fintech SaaS Neobanking Lendingtech Payments 0%

20%

40% Market Size CAGR (2021- 2025)

Source: Inc42

60%

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Lendingtech Was The Most Preferred Segment Among Indian Fintech Investors Q1 2022 Insurtech 5.6%

Insurtech 0.9% Neobanking 8.6%

Fintech SaaS

892

Payments 6.9%

152

222

$1.7 Bn (Q1 2022)

50.5%

Neobanking

Source: Inc42

Lendingtech 40.3%

72 Deals (Q1 2022)

7

9.7% 8

229 12.9%

29

5

Lendingtech

12.6%

Investment Tech

4

256

Payments 14.5%

Fintech SaaS 11.1%

19

Investment Tech 26.4%

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WhatsApp Pay Rollout

10 Mn

November 2020

40 Mn

November 2021

100 Mn

April 2022

According to NPCI regulations, no single third-party payment app is allowed to control more than 30% of the transactions that happen on the UPI platform.

Even though PhonePe and Google Pay capture 47% and 34% of the market (as of April 2022), respectively, so they have been given until December 2023 to comply with the restriction.

Source: Inc42, NPCI

Current number of users

40 Mn+

220 Mn+

250 Mn+

350 Mn+

Customer initiated transactions (by volume)

2.50 Mn

1914.77 Mn

2616.26 Mn

740.76 Mn

Customer initiated transactions (by value)

242.40 Cr

344,791.35 Cr

486,557.03 Cr

85,918.88 Cr

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UPI Transactions: Volume & Value In Q1 2022

PhonePe Others

6.8

3.8%

Paytm 15.7%

Others 5.3%

0.56

2.3

14.5 Bn UPI Volume

1,171 18.6

PhonePe 46.4%

Paytm 10.2%

49.0%

35.6

$349 Bn UPI Value

Google Pay 5

Source: Inc42, NPCI

34.1%

124

Google Pay 35.5%

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Cryptocurrency In India: Hailed by the public condemned by the government 2nd

$80 Bn+

59% ($47 Bn)

6th

$68 Mn+

rank on global crypto adoption index

worth cryptocurrency value received between July ‘20 to June ‘21

of total crypto value received was on DeFi platforms

rank on global DeFi adoption index

worth of total traded 24h volume on Indian crypto exchanges

Cryptocurrency is the most widespread product of blockchain technology to date and India (ranked 2) is at the forefront of its adoption, ahead of both the United States (ranked 8) and China (ranked 13) on the Global Cryptocurrency Adoption Index 2021.

India is also ahead in terms of Decentralised Finance (DeFi) adoption. Ranked 6th globally on the overall DeFi adoption index 2021. Whereas when it comes to on-chain value transferred on DeFi India ranks 1st globally.

The central government's negative attitude toward cryptocurrency/tokens, combined with a lack of understanding of blockchain technology and the use case of tokens/crypto in the blockchain ecosystem, has created a cloud of policy uncertainty in the country, forcing key players in the sector to seek safer havens in places like Dubai (UAE) and Singapore.

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Crypto Taxation: Major Bottleneck In 2022, India passed crypto tax law. It includes: Starting April 1st, a 30% tax plus cess and surcharge is levied on all profits arising from crypto gains While calculating 30% crypto, loss from one crypto asset will not be counted against the income from other crypto assets The cost incurred to the setting up of infrastructure will not be counted as the cost of acquisition while taxing income from crypto mining The government has also imposed 1% TDS on all crypto transactions if the total volume of transactions exceeds certain amount. It will came into effect from July 1, 2022.

Besides, recent reports suggest that: GST Council is planning to impose 28% GST on par with GST imposed on casinos, betting and lottery.

The government may also introduce a new tax for decentralized finance (DeFi) platforms. The government is reportedly planning to impose 20% TDS on transactions on these platforms

UPI & Crypto In April 2022, several cryptocurrency disabled UPI payments on their platform after NPCI clarification stating “National Payments Corporation of India (NPCI) would like to clarify that we are not aware of any crypto exchange using UPI.” Since April, crypto exchanges are seeing a steady decline in trading volumes since the beginning of April over new tax rules and payment mechanism issues.

NPCI is yet to come out with a formal notification about the issue.

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Cryptocurrency Trading Volume On Major Indian Exchanges Are Falling Total trade volume lost $342 Mn in May compared to April, from $2 Bn (Apr 2022) the volume plunged 16% to $1.7 Bn (May 2022) 200

Trade Volume ($ Mn)

150

100

50

0

1-Mar-2022

1-Apr-2022 CoinDCX

1-May-2022 WazirX

Bitbns

1-Jun-2022

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Recurring Payments: RBI’s E-Mandate Ruling Timeline August 2019 RBI announced framework for e-mandate-based recurring transactions (recurring payment limit was kept below INR 2,000)

January 2020 E-mandate on UPI payments was introduced

December 2020 The upper limit was increased to INR 5,000/transaction and the implementation deadline was kept until March 31, 2021

March 2021 Implementation deadline extended to September, 30, 2021

October 2021 New rules on recurring payments came into effect

E-Mandate Rule An issuer shall send a pre-transaction notification to the cardholder at least 24 hours before the actual charge/debit happens as risk mitigation and customer facilitation measure for transaction value less than or equal to INR 5,000 For recurring payments above INR 5,000, the customers have to give their consent and go through a two-factor authentication process for every payment.

The cardholder can opt out of that particular transaction or the e-mandate after receiving the pre-transaction notification.

PAPG (Payment Aggregators and Payment Gateways) guidelines do not permit merchants to store customer card details apart from issuing banks and card networks.

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Recurring Payments: Challenges, Issues & More E-Mandate Rule Inadequate infrastructure Lack of coordination among merchants, fintech players and banks Cardholders faced failed auto transactions and were asked to reroute their payments.

Many of the merchants still don’t have the option to set up recurring payments on their debit and credit cards

How Players Optimised BillDesk and Visa partnered to launch Standards Instructions Hub (SI-Hub) Mastercard joined hands with Razorpay to build a recurring payments platform called MandateHQ PayU came up with a platform called Zion with a dashboard for subscription management Merchants such as Netflix, Disney+ Hotstar, JioSaavn, Bennett, Coleman and Company, PolicyBazaar Insurance Broking, Goonj, HelpAge India, Gaana and others are live on UPI AutoPay

Issues At The Merchant’s End Moving from monthly recurring payments cycle to yearly payments to avoid the hassle of monthly reminders for payments, but resulting in low footfall Apple Music asked its customers to add cash to their Apple ID to continue the subscription Netflix placed several accounts on hold due to a lack of clarity on payment information

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32 Soonicorns

$64 Bn Combined Valuation

$12 Bn Combined Valuation

$12.4 Bn Total Capital Raised

$4.8 Bn Total Capital Raised

Top Subsectors

21 Unicorns

09 Payments 05 Investment Tech 03 Insurtech

15 Bengaluru

06 Delhi NCR 03 Mumbai

TopHubs

10 Bengaluru Top Hubs

Top Subsectors

The State Of Fintech Unicorns & Soonicorns In India

08 Mumbai 02 Delhi NCR

14 Lendingtech 06 Fintech SaaS 06 Payments

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Fintech Startup Landscape: Unicorns, Soonicorns & Growth Stage Companies Unicorns (Valued $1 Bn+)

Soonicorns (Valued $200 Mn+)

Growth Stage (Series A & B)

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List Of Fintech Unicorns In India Company Name

Segment

Headquarters

Became Unicorn In

Years To Unicorn

Valuation

Total Funding

Notable Investors

Insurtech

Mumbai

2021

4

$1.1 Bn

$458 Mn

General Atlantic, Lightspeed Venture Partners, Multiples Alternate

Payments

Delhi NCR

2021

3

$2.9 Bn

$701 mn

Alteria Capital, BEENEXT, Coatue, InnoVen Capital, Insight Partners

Payments

Mumbai

2018

18

$2.5 Bn

$241 Mn

Clearstone Venture Partners, General Atlantic, TA Associates

Fintech SaaS

Chennai

2021

10

$3.5 Bn

$468 Mn

Accel, Insight Partners, Tiger Global Management, Sapphire Ventures

Cryptocurrency

Mumbai

2021

3

$1.1 Bn

$109 Mn

B Capital Group, Bain Capital Ventures, Block.one, Polychain Capital

Cryptocurrency

Bengaluru

2021

4

$1.9 Bn

$301 Mn

Paradigm, Andreessen Horowitz,Coinbase Ventures

Payments

Bengaluru

2021

3

$4 Bn

$722 Mn

Sequoia Capital India, DST Global, Ribbit Capital, Falcon Edge Capital

Lendingtech

Chennai

2022

2

$1.2 Bn

$227 Mn

B Capital Group, Insight Partners, Lightspeed India

Insurtech

Bengaluru

2021

5

$3.5 Bn

$531 Mn

A91 Partners, Faering Capital, Fairfax Financial Holdings, TVS Capital

Investment Tech

Bengaluru

2021

5

$3 Bn

$393 Mn

CRV, Globespan Capital Partners, Helion Venture Partners

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Company Name

Segment

Headquarters

Became Unicorn In Years To Unicorn

Payments

Delhi NCR

2021

Neobanking

Bengaluru

Lendingtech

Valuation

Total Funding

Notable Investors

12

$1.5 Bn

$184 Mn

Accel,Bessemer Venture Partners, Tiger Global Management, Sequoia

2022

5

$1 Bn

$141 Mn

BEENEXT, 3One4 Capital, Trifecta Capital Advisors, Temasek Holdings

Delhi NCR

2022

6

$1 Bn

$200 Mn

Tiger Global Management, Norwest Venture Partners, Matrix Partners

Payments

Delhi NCR

2015

5

$5.9 Bn

$2.4 Bn

SoftBank, Alibaba, Berkshire Hathaway, Intel Capital, Elevation Capital

Payments

Bengaluru

2018

6

$5.5 bn

$1.7 Bn

Flipkart, Walmart

Payments

Delhi NCR

2020

22

$6 Bn

$1.4 Bn

Actis, Flipkart, Lone Pine Capital, Madison India Capital, Mastercard

Insurtech

Delhi NCR

2018

10

$4.6 Bn

$767 Mn

Tencent, Tiger Global Management, SoftBank Vision Fund, Wellington

Payments

Bengaluru

2020

6

$7.5 Bn

$742 Mn

Tiger Global Management, Sequoia Capital India, GIC, Ribbit Capital

Lendingtech

Bengaluru

2021

5

$1 Bn

$291 Mn

Blume Ventures, Tiger Global Management, Insight Partners

Investment Tech

Bengaluru

2020

10

$2 Bn

Bootsrapped

Bootsrapped

Fintech SaaS

Bengaluru

2021

6

$1.5 Bn

$340 Mn

Sodexo, SoftBank, Mastercard

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List Of Fintech Soonicorns In India Company Name

Segment

Headquarters

Founding Year

Valuation

Total Funding

Notable Investors

Lendingtech

Chennai

2008

$115 Mn

$270 Mn

Sequoia Capital India, Amazon Inc, Eight Roads Ventures India, Mousse Partners

Lendingtech

Bengaluru

2013

$201 Mn

$198 Mn

Amazon,Elevation Capital, Ribbit Capital, Sequia Capital India

Payments

Bengaluru

2015

$41 Mn

$107 Mn

Musha Ventures, Y Combinator, Smilegate Investment, Apis Partners

Fintech SaaS

Bengaluru

2011

$140 Mn

$700 Mn

Composite Capital Management, Elevation Capital, Founders Fund, Sequoia Capital

Lendingtech

Mumbai

2015

$375 Mn

Not Available

Accel, Barclays Investment Bank, Sequoia Capital India, Silicon Valley Bank

Neobanking

Bengaluru

2019

$75 Mn

$315 Mn

B Capital Group, Hillhouse Capital Group, Ribbit Capital, Sequoia Capital

Payment

Mumbai

2006

$37 Mn

$329 Mn

Bharat Petroleum Corp, Intel Capital

Lendingtech

Jaipur

2015

$141 Mn

Not Available

Sequoia Capital India, Faering Capital, Norwest Venture Partners, Maj Invest

Lendingtech

Mumbai

2016

$254 Mn

$300 Mn

Franklin Templeton India, Kotak Mahindra Bank, Alpha Capital, Moore Venture

Investment Tech

Delhi NCR

2018

$143 Mn

$635 Mn

Tiger Global, Steadview Capital, Dragoneer, Sixteenth Street Capital

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Company Name

Segment

Headquarters

Founding Year

Valuation

Total Funding

Notable Investors

Payments

Ahmedabad

2007

$6 Mn

$616 Mn

Bennett Coleman & Co. Ltd., Network 18, Next Orbit Ventures, Brand Capital

Neobanking

Mumbai

2019

$157 Mn

$711 Mn

Global Founders Capital, Hummingbird Ventures, Matrix Partners, Sequoia Capital

Payments

Bengaluru

2012

$87 Mn

$403 Mn

SoftBank, Wellington Management, Accel, VEF

Fintech SaaS

Bengaluru

2018

$187 Mn

$600 Mn

B Capital Group, Moore Strategic Ventures, Surge, Tribe Capital, Better Capital

Lendingtech

Mumbai

2015

$63 Mn

$220 Mn

Sicreva capital, Endiya Partners, VentureEast, Sistema, BAC Acquisitions

Lendingtech

Bengaluru

2018

$150 Mn

$375 Mn

NewQuest Capital Partners, Motilal Oswal, Alpine Capital, PremjiInvest

Lendingtech

Ahmedabad

2014

$263 Mn

$138 Mn

India Quotient, FMO, Alteria Capital, Bertelsmann India Investments, Sistema Asia

Fintech SaaS

Chennai

2014

$107 Mn

$600 Mn

Tiger Global, BEENEXT, Flourish Ventures, Omidyar Network, 8i Ventures

Lendingtech

Bengaluru

2014

$108 Mn

$625 Mn

Tiger Global, Winter Capital, Evolvence India, Accel

Payments

Mumbai

2011

$98 Mn

$439 Mn

Matrix Partners India, Axis Bank, Falcon Edge Capital, Meru Capital,DSG

Lendingtech

Bengaluru

2018

$582 Mn

$670 Mn

Gaja Capital, International Finance Corporation

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Company Name

Segment

Headquarters

Founding Year

Valuation

Total Funding

Notable Investors

Neobanking

Bengaluru

2015

$149 Mn

$133 Mn

Accel, Lightrock, Horizons Ventures, Tencent, Social Capital

Payments

Pune

2019

$225 Mn

$750 Mn

QED Investors, Oceanview Capital Partners, Sequoia Capital, Matrix Partners

Fintech SaaS

Mumbai

2006

$41 Mn

$930 Mn

Kleiner Perkins, Lightbox, Mayfield Fund, Sherpalu Ventures, Visa

Fintech SaaS

Bengaluru

2020

$105 Mn

$750 Mn

Tiger Global, RTP Global, DST Global, XYZ Venture Capital, Digital Horizon

Lendingtech

Bengaluru

2015

$173 Mn

$300 Mn

Accel, Sequoia Capital, GGV Capital, Bertelsmann India Investments, Lightbox

Investment Tech

Bengaluru

2012

$55 Mn

$63 Mn

Accel, InnoVen Capital, Flucas Ventures, Trifecta Capital, Kube VC

Lendingtech

Delhi NCR

2014

$145 Mn

Not Available

Northern Arc, Daesung Private Equity, SoftBank, Bon Angels Venture Partners

Insurtech

Mumbai

2015

$197 Mn

$900 Mn

Sequoia Capital, GGV Capital, Nexus Venture Partners, Jungle Ventures, Amasa

Lendingtech

Bengaluru

2020

$89 Mn

$350 Mn

General Catalyst, Elevation Capital, Accel, Eight Roads Ventures, Lightspeed

Fintech SaaS

Hyderabad

2011

$163 Mn

Not Available

Spectrum Equity

Lendingtech

Bengaluru

2015

$118 Mn

$425 Mn

Alteria Capital, Goldman Sachs, PayU, Primrose Hills Ventures, Quona Capital

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Revenue Analysis: Fintech Unicorns In India Company Name

Sales FY20

Sales FY21

YoY Growth

Acko Insurance

$50 Mn

$56 Mn

13%

Bharatpe

$796K

$16 Mn

20x

Billdesk

$179 Mn

$246 Mn

38%

Chargebee

$13 Mn

$16 Mn

28%

CoinDCX

$831K

$5 Mn

525%

CoinSwitch Kuber

$2 Mn

$10 Mn

452%

Cred

$69K

$12 Mn

170x

Groww

$39K

$5 Mn

139x

MobiKwik

$47 Mn

$38 Mn

-19%

Open

$10K

$757K

75x

Oxyzo

$18 Mn

$26 Mn

46%

Paytm

$437 Mn

$374 Mn

-15%

PhonePe

$50 Mn

$92 Mn

86%

Pine Labs

$92 Mn

$61 Mn

-33%

Policybazaar

$103 Mn

$118 Mn

15%

Razorpay

$68 Mn

$112 Mn

65%

Slice

$4 Mn

$5 Mn

18%

Zerodha

$125 Mn

$364 Mn

191%

Source: Inc42, NSE

$1.7 Bn Aggregate revenue clocked by fintech unicorns in FY21 compared to $1.3 Bn in FY20.

$2.2 Bn Aggregate expenditure clocked by fintech unicorns in FY21 compared to $2 Bn the previous year.

28% YoY surge in aggregate revenue as opposed to 9.4% in total expenditure. Indicating the pandemic infused fintech adoption helped Indian unicorns to generate sales efficiently in FY21.

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Profitability Analysis: Fintech Unicorns In India Company Name

EBITDA FY20

EBITDA FY21

YoY Growth

Acko Insurance

$-24.5 Mn

$-17.2 Mn

30%

Bharatpe

$-121.4 Mn

$-213.7 Mn

76%

Billdesk

$43.7 Mn

$51.5 Mn

18%

Chargebee

$2.0 Mn

$2.4 Mn

18%

CoinDCX

$0.1 Mn

$0.9 Mn

1056%

CoinSwitch Kuber

$0.9 Mn

$4.8 Mn

455%

Cred

$-47.6 Mn

$-68.6 Mn

44%

Groww

$-1.1 Mn

$0.2 Mn

115%

MobiKwik

$-12.4 Mn

$-14.7 Mn

18%

Open

$-5.4 Mn

$-8.4 Mn

55%

Oxyzo

$11.8 Mn

$19.2 Mn

62%

Paytm

$-346.3 Mn

$-212.8 Mn

39%

PhonePe

$-225.0 Mn

$-212.7 Mn

5%

Pine Labs

$7.9 Mn

$7.5 Mn

-5%

Policybazaar

$-39.3 Mn

$-18.9 Mn

52%

Razorpay

$-0.3 Mn

$2.0 Mn

688%

Zerodhat

$78.8 Mn

$198.3 Mn

151%

Source: Inc42, NSE

50% Fintech unicorns in India were EBIDTA positive in FY21.

$6.5 Mn Monthly burn rate of Indian fintech unicorns in FY21 as compared to $5.4 Mn in FY20.

$200K Median EBITDA of Indian unicorns in FY21, a 115% increase from negative $1.1 Mn in FY20 indicating a shift towards profitability among the key players in India’s fintech ecosystem.

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Indian Fintech Startups: Listed & Potential IPOs In 2022 Company Name

Headquarters

Public Listing Status

Current Valuation

IPO Price

Gains/Loss From IPO Price

Mumbai

Listed

$291 Mn

577

-56%

Delhi NCR

2022

$700 Mn

Not Applicable

Not Applicable

Bengaluru

2022

$548 Mn

Not Applicable

Not Applicable

Delhi NCR

Listed

$5.5 Bn

2150

-71%

Delhi NCR

2022

$5 Bn

Not Applicable

Not Applicable

Delhi NCR

Listed

$3.9 Bn

980

-33%

Bengaluru

2022/23

$4 Bn

Not Applicable

Not Applicable

Source: Inc42, Multiple Secondary Sources Note: Market capitalisation is considered as valuation for publicly listed companies. The data is as on 3 June 2022

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20 Early Stage Indian Fintech Startups Making Waves Arthan

Betteropinions

Arthan Finance is a lending tech startup that provides SMBs with business loans.

Betteropinions is a platform for option trading that allows users to accurately predict the outcome of an event.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Lendingtech

$2.4 Mn

Seed Stage

2018

Mumbai

Investment Tech

$1.01 Mn

Seed Stage

2021

Delhi NCR

NOTABLE INVESTORS

NOTABLE INVESTORS

Michael & Susan Dell Foundation

Y Combinator, Soma Capital

Claimbuddy

EduFund

Claimbuddy assists hospitals and doctors with insurance claim management.

EduFund is a fintech startup that makes global education financing planning and procurement easier.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Insurtech

$2.8 Mn

Seed Stage

2020

Delhi NCR

SUBSECTOR

Investmen/ Lendingtech

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

$1.3 Mn

Seed Stage

2020

Ahemdabad

NOTABLE INVESTORS

NOTABLE INVESTORS

Chiratae Ventures, Titan Capital, Rebright Partners

Anchorage Capital Partners, ViewTrade Holding Corp

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Fello

Flint

The Fello platform allows users to save and invest in safe assets such as digital gold.

Flint is a cryptocurrency investment app that allows users to invest in and earn a return on stablecoins.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Investment Tech

$1 Mn

Seed Stage

2020

Bengaluru

Investment Tech

$5.1 Mn

Seed Stage

2021

Singapore

NOTABLE INVESTORS

NOTABLE INVESTORS

Entrepreneur First, Dexter Angels, JITO Angel Network

Sequoia Capital India, Global Founders Capital

Fundfina

Goalteller

Fundfina is a fintech SaaS platform that provides B2B customers digital lending APIs.

Goalteller is a fintech platform that assists users in setting financial goals.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Fintech SaaS

$1.6 Mn

Seed Stage

2018

Mumbai

Investment Tech

$402K

Seed Stage

2020

Bengaluru

NOTABLE INVESTORS

NOTABLE INVESTORS

Telama Investment, NAFA Capital, HEM Angels

Rainmatter Capital

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GoSats

Healthysure

GoSats is a smartphone app that rewards users in bitcoin for every purchase they make.

Healthysure is an Insurtech platform that allows businesses to purchase group health insurance online.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Investment Tech

$700K

Seed Stage

2020

Bengaluru

Insurtech

$1.2 Mn

Seed Stage

2021

Mumbai

NOTABLE INVESTORS

NOTABLE INVESTORS

Y Cominator, Alphabit Fund, Fulgur Ventures

IPV, We Founder Circle, Dexter Angels, Campus Fund

Insurmile

Kutumba

Insurmile is a platform for insurance technology that provides a digital marketplace for purchasing and comparing insurance plans.

Kutumba is a personal finance management tool that allows users to manage and share their financial data with friends and family.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Insurtech

$350K

Seed Stage

2017

Bengaluru

Personal Finance

$46K

Seed Stage

2020

Bengaluru

NOTABLE INVESTORS

NOTABLE INVESTORS

Seeders

Startup India Seed Scheme Fund

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Oromoney

Pensionbox

Oro Money is a fintech startup in India that provides gold loans and gold storage solutions.

PensionBox is a fintech startup that assists users with retirement planning and investing.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Lendingtech/ Investment Tech

$4.8 Mn

Growth Stage

2020

Chennai

Investment Tech

$160K

Seed Stage

2021

Bengaluru

NOTABLE INVESTORS

NOTABLE INVESTORS

021 Capital, PremjiInvest

Keynote India, SAT Industry, 100X. VC

Pocketly

Swipe

Pocketly is a lending technology startup that provides college students and salaried individuals with instant credit.

Swipe is an Indian fintech startup that provides instant invoicing solutions to SMBs and entrepreneurs.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Lendingtech

$3 Mn

Seed Stage

2019

Bengaluru

Fintech SaaS

$2.1 Mn

Seed Stage

2021

Hyderabad

NOTABLE INVESTORS

NOTABLE INVESTORS

100X.VC, Dholakia Ventures

Y Combinator, Global Founders Capital, K3 Diversity Ventures

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Threedots

Tradex

Threedots is a social media platform in India for stock market investors and traders.

TradeX is an option trading platform that allows users to trade based on credible opinions.

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Investment Tech

$4 Mn

Seed Stage

2021

Bengaluru

Investment Tech

$946K

Seed Stage

2021

Delhi NCR

NOTABLE INVESTORS

NOTABLE INVESTORS

Kalaari Capital, Better Capital, iSeed

TDV Partners, Soma Capital

Upswing

Deciml

Upswing offers full-stack APIs for digital finance solutions such as— neobanking, lending among others.

Deciml is a micro-investing app which targets users in the 21-27 years age group

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

SUBSECTOR

TOTAL FUNDING

FUNDING STAGE

FOUNDING YEAR

HQ

Fintech SaaS

$4 Mn

Seed Stage

2021

Mumbai

Investment Tech

$1 Mn

Seed Stage

2020

Pune

NOTABLE INVESTORS

NOTABLE INVESTORS

Capier Investments, Multiply Ventures, Better Capital

Unnati Labs, Agility Ventures, MyAsia VC

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Insurtech Market In India: A Snapshot Venture Capital

Market Opportunity $339 Bn

57%

Market Opportunity (2025)

CAGR (2021 to 2025)

$1.8 Bn

121%

Total Funding (2014 to Q1 2022)

Funding CAGR (2014 to 2021)

Key Segments Digital Insurance Brokers

Corporate Insurance Brokers

Insurance SaaS

3.2%

1%

Life Insurance Penetration In India (FY21) Non-Life Insurance Penetration In India (FY21)

324+

Active Insurtech Startups In India Digital Insurance Underwriter

40+

Funded Insurtech Startups

Health Clubs (Not categorised as insurance product)

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Insurtech Startups In India: A Landscape Digital Broker

Insurance SaaS

Corporate Insurance Broker

Digital Insurance Underwriter

Health Clubs

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India’s Insurtech Sector Offers A $339 Bn Market Opportunity The market opportunity in the Indian insurtech sector is growing at a CAGR (2021 to 2025) of 57% 400

InsurTech Market In India ($ Bn)

+6x 300

200

100

0 Source: Inc42

2021

2022

2023

2024

2025

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Competitive Scenario: Insurtech In India Segment

Total Funding

Company Stage

Target Audience

Digital Insurance Underwriter

$458 Mn

Late Stage

B2C

Digital Insurance Underwriter

$586 Mn

Late Stage

B2C-B2B

Insurance SaaS

$730K

Growth Stage

B2B

Health Clubs

$5 Mn

Early Stage

B2C

Health Clubs

$14 Mn

Growth Stage

B2C

Corporate Insurance Broker

$16 Mn

Growth Stage

B2B

Digital Broker

$123 Mn

Late Stage

B2C

Digital Broker

$767 Mn

Public Listed

B2C-B2B

Corporate Insurance Broker

$21 Mn

Growth Stage

B2B

Insurance SaaS

$5 Mn

Growth Stage

B2B

Notable Investors

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Key Areas Of Focus For Insurtech Startups Strengthen Distribution Networks A lot of innovation is waiting to happen in the insurtech sector, primarily in the area of building distribution networks with a layer of technology playing a key role on top of it. There is a need to create an architecture that allows multiple entrepreneurs to be able to experiment with various segments and to find a solution that will work for India.

Fulfillment For A 360 Degree Growth Fulfillment remains one of the key challenge ahead of Indian insurtech startups. About 80 percent entrepreneurs’ primary focus remains on acquiring customers. However, it is the entire fulfillment cycle i.e. from building partnerships with insurers to building innovative products centered around current needs of the customers, customer acquisition as well as post sale services that needs to be taken into account.

Expansion To Tier 2 & Beyond Cities Unfortunately, most new and early-stage players are still battling for a small crowded target segment in tier 1 and urban cities. However, fintech startups who will be able to expand into the underserved and unserved markets, leverage technology as a solution, and build innovative products will be able to gain huge returns. Particularly, in insurtech segment, India is among the most underserved countries across the world.

Personalising Product Offerings All the major players in the insurtech space aim to align themselves with rapidly changing customer behavior and the shift in consumers' lifestyles towards healthy living.

The key area of focus is on personalisation of product offerings instead of mass consumer-focused products.

Innovations In The Underwriting This will lead to more flexibility and customised products with a fully digital experience combining zero friction on submissions, transparency on benefits and claims are some of the areas of focus for insurtechs which are current problem statements in the traditional insurance industry.

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Factors Contributing Towards The Growth Of Insurtech In India Consumer Inclination Post pandemic, there has been seen a rise in consumer spending on insurance products. India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1.0%. Premiums from India’s life insurance industry is expected to reach INR 24 Lakh Cr ($317.98 Bn) by FY31.

Distribution Driving Penetration There have been B2C players like PolicyBazaar, Digit which have cracked distribution directly on the retail side but there is an increasing number of B2B2C players using partnerships with corporates/SMEs to drive higher penetration with lower costs of acquisition.

Improved Reach & Technology Blend Acceleration of direct-to-customer digital sales for simpler products, to what we call “digital natives”, Omni-orchestration for lead generation and conversions, AI-enabled agent lifecycle management have improved reach and conversion. Data analytics has further helped identify new customer segments and also helped increase personalisation, improve underwriting, and enhance pricing proposition.

Emergence Of The National Health Stack Currently, the Indian insurance market has a very low penetration compared to global leaders. National Health Stack has helped improve the penetration into the insurance sector. The digital infra growth has also boosted insurtech adoption and helped in increasing the exposure in Tier 2 markets.

Rapid Growth In Insurtech Funding Indian insurtech startups raised $1.8 Bn funding between 2014 and Q1 2022, with the year 2021 gaining the major part of this funding i.e. $822 Mn. Pandemic has prompted many insurers to look for virtual insurance offerings and technological solutions to improve operational efficiencies. At the same time, there have been efforts to reach the remote towns and cities by the insurtech startups. Skittish investors have although played sceptically, yet the quest for quality startups is still on.

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Top 10 Funding Rounds In Indian Insurtech Startups Year

Domain

Funding Amount ($ Mn)

2021

Digital Insurance Underwriter

225

2018

Digital Broker

200

2021

Digital Insurance Underwriter

200

2020

Digital Broker

130

2021

Digital Broker

123

2020

Digital Insurance Underwriter

84

2017

Digital Broker

77

2021

Digital Broker

75

2019

Digital Insurance Underwriter

65

2020

Digital Insurance Underwriter

60

Investors

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Insurtech Sector Recorded Major Jump In Funding In 2021 1000

40

750

30

500

20

250

10

0

2014

2015

2016

2017

2018

2019

Year Funding Amount ($ Mn) Source: Inc42 Note: There year mentioned above is calendar year

Deal Count

2020

2021

Q1 2022

0

Deal Count

Funding Amount ($ Mn)

Acko’s $225 Mn and Digit Insurance’s $200 Mn were the top funding deals that year

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Insurtech Funding In India: Key Segments

Others 4.7% Corporate Insurance Broker 12.9%

Digital Insurance Underwriter 14.1%

Source: Inc42

45 4

85 Funding Deals

11

12

Digital Broker 52.9%

SaaS 13

Corporate Insurance Broker 2.9%

15.3%

Digital Insurance Underwriter 43.4%

929 Digital Broker 52

85 Funding Deals

772

52.2%

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The Preferred Choice Of Purchasing Insurance In India Life Insurance

Health Insurance

General Insurance

Choice of Purchase medium (%)

Choice of Purchase medium (%)

Choice of Purchase medium (%)

18

Online

100

12

Online

100 Online

26

24

11

100

16 33

24

13 45

40

38

Insure/Aggr. Bank website website

Source: BCG Survey

Banca

Agency

Total

Insure/Aggr. Bank website website

Banca

Agency

Total

Insure/Aggr. Bank website website

Banca

Agency

Total

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Notable Insurtech Investors In India Total Deal Count

Total Deal Count

6

4

2

7

3

4

5

4

3

5

3

5

2

4

4

Source: Inc42

Notable Startups Invested

Notable Startups Invested

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PolicyBazaar: IPO & Beyond 10% At the end of March 2022 quarter the company recorded a sales of $72 Mn at an expenditure of $108 Mn.

0% -10% -48% decrease in stock proce from peak (1,332)

-20% -30%

The quarterly revenue witnessed an annual increase of 100% whereas the expenditure increased by 130%.

The company continues to record negative operating profit margin (OPM). The OPM of quarter ending March 2022 was -50% a 20 percentage points increase from -30% in quarter ending Mar 2021.

-40% -50% -60% Dec 2021

Feb 2022

Policy Bazaar (PB Fintech Ltd.)

₹689.10

NIFTY 50

16,352.45

May 2022

-₹526.50

43.31%

-630.75

3.71%

Source: Inc42, NSE Note: Any information provided in this slide should not be treated as an investment advice

Growing competition from new insurtech startups which include both aggregators and digital underwriters could lead to increased cost of customer acquisition,as a result hampering the operating profit margin (OPM)

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Digit Insurance: IPO Prospect Digit Insurance Founded In

2016

Total Funding

$586 Mn

Valuation

$4 Bn

Segment

Digital Insurance Underwriter

Founders

Kamesh Goyal, Philip Varghese, Sriram Shankar, Vijay Kumar

Investors

Sequoia Capital, TVS Capital, A91 Partners, Faering Capital

Total Customers

20 Mn+

Digit Insurance net premium was $454 Mn in FY22, a 79% surge from $254 Mn in FY21.

The insurtech unicorn is looking to raise $500 Mn via IPO. The company is looking at $4.5 Bn - $5 Bn valuation.

The combined worth of life and non-life insurance premiums in India is $111 Bn (as per FY21). Digit’s market penetration currently stands at less than 1% (0.4% precisely), indicating high addressable market for the company in India.

The digital first approach and growing number of tech companies in the insurance sector is bridging the much needed transformation in this traditional industry.

Preference of digital medium for purchasing insurance is the biggest plus point for Digit Insurance in terms achieving competitive moat and higher market share.

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Digit Took 4 Years To Achieve Unicorn Status

$142 Mn

Founded In

2016

Source: Inc42

Venture Round (June 2017 to June 2019)

Venture Round (Jan. 2020 to Jan. 2021)

$104 Mn

$17.1 Mn

Venture Round (26 Aug. 2021)

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Fintech Trends To Watch Out For Consumer Inclination According to analysts, insurtech is the fastest-growing fintech sub-segment in terms of market opportunity, growing at a CAGR of 57%, followed by investment tech (44%) and fintech SaaS (40%). The growing adoption of financial technology products and services in India has further given boost to neobanking platforms. With neobank platform Open Bank becoming the 100th unicorn, the investor focus towards the sub segments of fintech is expected to rise.

Road To IPO To Be Tough For Fintechs Many Indian fintech startups are eyeing IPOs this year, including the likes of Digit Insurance, MobiKwik, Navi Technologies, and Pine Labs. These IPO-bound startups are set to face unique challenges, which include building public confidence around respective revenue/business models, diluting foreign ownership as well as working around tighter scrutiny by multiple regulators in the financial sector.

Newer Fintech Solutions To Gain Momentum India is currently witnessing several sachetised products coming out in the insurance (enabled by bite-sized insurance/usage-based pricing) and wealth space (high frequency, low ticket saving and investment products, new asset classes) to cater to a larger population. With the rise of API based banking, embedded finance, open banking, and personalised services should gather momentum. Capital may not be available in plenty (as in the last few years) but will find its way to solid companies at same valuations.

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Personalisation To Play Key Role While Serving The Next Billion The insurtech segment has seen emergence of new customer segments such as MSMEs, women professionals, as well as tier 2 and beyond. Here, convenience is the key need and overall product and service experience dominates customers future choices. Themes such as digital marketing, martech, regtech, user experience design are expected to be in play to build newer capabilities and improve customer acquisition and experience.

Data & Analytics To Be The Key Differentiator Data analytics has become a core competency with the rise of digital savvy population. In order to gain significant impact across the value chain, insurtechs are expected to focus on implementing data analytics in areas such as revenue generation, underwriting, claims management, attrition management, resource planning, risk prevention and more.

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Key Challenges Ahead Of Indian Fintechs Fintech Vs Traditional Finance Models Fintechs are primarily designed to operate with a sophisticated working model. Due to this reason, they are unable to maintain a smooth relationship with banks and other financial institutions. While banks fear working with fintechs as they risk losing their reputation

Financial/ Tech Literacy Unbanked population, poor infrastructure in terms of internet connectivity, and low literacy level are the other hindrances. Still, a huge Indian population (48 percent) does not have bank accounts which are a must for conducting online transactions. Even though the people have bank accounts they still face the issues of poor internet connectivity which takes more processing time to finish the transaction. So, people tend to prefer a cash transaction rather than an online transaction.

Low trust on technology led solutions From the consumer perspective, new age fintech segments such as neobanks, crypto, Web3 are still alien to most of the Indian population. Having viable CACs (customer acquisition costs) and reliable data for underwriting is one of the key challenges for fintech startups.

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Stringent Regulatory & Compliances Not only are the existing regulations challenging to cope with, but they also make it difficult for fintech players to enter the Indian markets. Compliance laws are laid in place as a restrictive regulatory framework to prevent fraud. However, they too act as massive barriers for the new Fintech entrants. While our central bank is amongst the most sophisticated gate-keeper in the world, it takes a substantial amount of effort for fintech companies to comply with formalities - be it Net Worth requirements, dependence on a scheduled bank for its back-end, licensing to name a few. We can see a direct impact of some of these regulations on Web 3/crypto startups, especially in relation to payments.

Constant Monitoring & Data Security Cybersecurity has become a pain point for fintechs dealing with sensitive data. Cyber attacks often result in monetary as well as loss of trust. The key challenge here is to create better security protocols, enhance encryption data and identify vulnerabilities in the systems.

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Credits

Inc42 is India’s largest tech media & information platform on a

ANALYST

mission to build & serve India’s tech, startup & internet economy.

Sandeep Singh

From breaking the latest news to discovering the hottest startups,

EDITOR

from spotting upcoming trends to simplifying complex concepts, we

Meha Agarwal

cover everything tech in India’s internet economy.

Born in January 2015, Inc42 has become the leading source for news & analysis on India’s rapidly growing tech, startup & internet economy.

DESIGN & INFOGRAPHICS Sabith

Inc42, with over 30,000+ published stories, 50+ research reports, 100+ conferences & events & having featured 1000s of entrepreneurs, now reaches over 25 Mn+ tech leaders & professionals every month.

Contact: editor@inc42.com

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