India’s fintech market is now valued at $31 billion rated the world’s fastest growing – 67% of the more than 2,100 fintech entities in operation have been set up in the last five years. Bengaluru and Mumbai are where most fintech companies have their India headquartered – as they are the country’s technology and financial hubs. With this rate of investment it is projected to grow to $84 billion by 2025.
Growth equity momentum surged, with $15 billion in investments in H1 2021, 50% higher than the whole of 2020 and three times the deal value in the first half of 2020. Exit momentum also spiked in H1 2021, with a total exit value of $12 billion, four times that of the year-ago period. Despite a severe second wave earlier this year, 2021 has turned the corner, with unprecedented stock market gains on the back of strong recovery forecasts, robust foreign institutional investor inflows, and Covid-19 vaccine approval and administration.
The sectors of consumer technology, IT/SaaS, BFSI, and healthcare dominated the first half of 2021, contributing to 80% of the total investments. Secondly, outright buyouts continued to decline, especially as investment focus shifts heavily to consumer technology and SaaS, where minority investments are the norm. Within consumer technology investments, vertical e-commerce, edtech, fintech, and foodtech attracted the largest investments, driven by a continued investor interest in at-home services.
Investments in IT/SaaS also grew 375% year-on-year in the first half of 2021, as Covid-19 accelerated the need for digitisation and cloud adoption across firms. Within BFSI, investor interest in insurance spiked, driven by a changed risk perception across individuals and businesses due to Covid-19. The healthcare sector has seen tremendous growth in the first half of 2021, with a year-over-year investment uptick of about 250% compared to 2020.