India secured the third position globally in terms of funding raised for the fintech sector in Q1 2025 at $366 million, similar funding of $365M was raised in the previous quarter

The late-stage funding for fintech start-ups surged 47 per cent to $227 million in Q1 2025, up from $154 million in the previous quarter, signalling renewed investor confidence in mature fintech players, according to data from Tracxn.

The rebound comes amid a cautious funding environment overall, suggesting that investors are selectively backing scaled fintechs with clear paths to profitability, strong regulatory alignment, or IPO potential.

Readiness for IPO

Abhishek Prasad, Managing Partner at Cornerstone Ventures, noted that the larger fintech players evolve their models to focus on profitability in order to demonstrate their readiness for IPOs in the last three years.

“Investors have been constantly looking for a good balance between growth and profitability through these years. Today some of the most impressive companies are emerging as clear market leaders and have achieved these metrics. This is bolstering investor confidence in late-stage fintech companies where such performance has become visible,” said Prasad.

He noted that while the regulatory environment continues to evolve, it’s also the push from the government on taking UPI global which are opening up new avenues for growth for scaled fintech players.

The data from Tracxn noted that India secured the third position globally in terms of funding raised for the fintech sector in Q1 2025 at $366 million, similar funding of $365M was raised in the previous quarter.

Sectoral trends

Industry experts noted that Lending and Insuretech are deep opportunities in the country. According to a report by Tracxn, the sector witnessed significant growth in specific segments, with banking tech, internet first insurance platforms, and investment tech emerging as top performers in Q1 2025.

“Infra side payment platforms and enablers of the payments ecosystem have seen several larger cheques as there are some pioneering companies scaling in this space as well,” added Prasad.

Banking Tech, the highest-funded sector, received a funding of $108 million, a 9 per cent increase compared to the $99 million observed in Q1 2024, while internet-first insurance platforms, the second-highest funded sector, witnessed $87 million in funding in Q1 2025.

Neha Singh, Co-Founder Tracxn, said: “The Indian FinTech sector continues to evolve despite market fluctuations. While funding levels have declined, the industry’s long-term growth potential remains strong. With increasing regulatory clarity, digital payment expansion, and a rising global footprint, we anticipate exciting opportunities for FinTech start-ups in the coming years.”

Published on April 8, 2025