State Of Indian Fintech Report Q2 2022 InFocus
Insurtech
© INC42 MEDIA | NOT FOR DISTRIBUTION / 2
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 3
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 4
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 5
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 6
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 7
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 8
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 9
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 10
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 11
India’s Fintech Startup Landscape Payments
Lendingtech
Investment Tech
Insurtech
Neobanking
Fintech SaaS
Cryptocurrency
© INC42 MEDIA | NOT FOR DISTRIBUTION / 12
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 13
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 14
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 15
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 16
$22 Bn+ Raised By Indian Fintech Startup Since 2014 Both the funding amount and deal count has increased 155% and 50% respectively 8.0
300
200 Deal Count
Funding Amount ($ 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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 17
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 18
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 19
$25 Mn Average Ticket Size Of Fintech Funding In Q1 2022 Compared to the previous year the average ticket size of venture capital investment in fintech startups surged 60% 50
Average Ticket Size ($ 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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 20
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 21
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%
© INC42 MEDIA | NOT FOR DISTRIBUTION / 22
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%
© INC42 MEDIA | NOT FOR DISTRIBUTION / 23
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 24
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%
© INC42 MEDIA | NOT FOR DISTRIBUTION / 25
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 26
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 27
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 28
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 29
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 30
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 31
Fintech Startup Landscape: Unicorns, Soonicorns & Growth Stage Companies Unicorns (Valued $1 Bn+)
Soonicorns (Valued $200 Mn+)
Growth Stage (Series A & B)
© INC42 MEDIA | NOT FOR DISTRIBUTION / 32
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 33
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 34
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 35
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 36
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 37
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 38
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 39
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 40
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 41
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 42
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 43
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 44
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 45
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)
© INC42 MEDIA | NOT FOR DISTRIBUTION / 46
Insurtech Startups In India: A Landscape Digital Broker
Insurance SaaS
Corporate Insurance Broker
Digital Insurance Underwriter
Health Clubs
© INC42 MEDIA | NOT FOR DISTRIBUTION / 47
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 48
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 49
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 50
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. $822 Mn. Pandemic has prompted many insurers to look for virtual insurance offerings and technological solutions to improve operational efficiencies. At the same time, there have been efforts to reach the remote towns and cities by the insurtech startups. Skittish investors have although played sceptically, yet the quest for quality startups is still on.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 51
Top 10 Funding Rounds In Indian Insurtech Startups Year
Domain
Funding Amount ($ 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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 52
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 53
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%
© INC42 MEDIA | NOT FOR DISTRIBUTION / 54
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 55
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
© INC42 MEDIA | NOT FOR DISTRIBUTION / 56
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)
© INC42 MEDIA | NOT FOR DISTRIBUTION / 57
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 58
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)
© INC42 MEDIA | NOT FOR DISTRIBUTION / 59
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 60
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 61
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.
© INC42 MEDIA | NOT FOR DISTRIBUTION / 62
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.
© © INC42 INC42 MEDIA MEDIA || NOT NOT FOR FOR DISTRIBUTION DISTRIBUTION // 63 63
www.inc42.com
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
ADDRESS Inc42 Media, 59/16, 4th Floor, Jujhar Tower, RD Marg, Kalkaji, New Delhi, Delhi 110019
© © INC42 INC42 MEDIA MEDIA || NOT NOT FOR FOR DISTRIBUTION DISTRIBUTION // 64 64
Disclaimer The data provided in this report has been obtained from public and private sources. We have made every attempt to ensure that the information presented in this report is accurate and free from any discrepancies. Ideope Media Pvt Ltd, the parent company of Inc42 Media and Inc42 DataLabs, is not responsible for any inaccuracy in the information presented or for any damages caused by the use of information provided in this report. In case of any discrepancy or errors in the data, you can contact us at editor@inc42.com and we will try our best to update the information in the digital version of the report. We are constantly updating our database of startups due to new person using or relying on any information in this publication. This report has been prepared in good faith on the basis of information available at the date of publication without any independent verification. Ideope Media Pvt. Ltd. does not guarantee the accuracy, reliability or completeness of the information in this publication. Readers are responsible for assessing the relevance and accuracy of the content of this publication. While this report talks about various individuals and institutions, Ideope Media Pvt. Ltd. will not be liable for any loss, damage, cost or expense incurred or arising by reason of anyperson using or relying on any information in this publication. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Ideope Media Pvt Ltd and is not intended to represent or imply the existence of an association between Ideope Media Pvt Ltd and the lawful owners of such trademarks. Information regarding third-party products, services and organisations was obtained from publicly available sources, and Ideope Media Pvt. Ltd. cannot confirm the accuracy or reliability of such sources or information. Its inclusion does not imply an endorsement by or of any third party. The views and opinions in this report should not be viewed as professional advice with respect to your business.