Funds raised by Indian fintechs sees 296% jump in 2021 at $5.94 bn

At a time when once seen as the poster-boy of India's digital payments system, Vijay Shekhar Sharma-owned Paytm has run into rough weather, global investors have been chasing fintech companies across the Asia-Pacific (APAC) region in 2021, suggests a note from S&P Global Market Intelligence. Fintech companies in APAC secured $15.69 billion from venture capitalists in 2021, sharply up from $5.87 billion they got in 2020 and 74 per cent higher than pre-pandemic levels in 2019, the report said.

US investors, led by venture capitalists, funded 358 fintech companies in the APAC region in 2021, up from 134 in 2020. Within the APAC region, India attracted the most funding, with $5.94 billion raised across 236 deals in 2021, up from $1.5 billion across 118 deals in 2020, S&P Global Market Intelligence report said. This translates into a rise of 296 per cent in value terms in 2021. DETAILS HERE

Global investors, according to the report, were most active in backing fintech companies specializing in investment and capital markets technology such as blockchain, internet of things and artificial intelligence (AI), funding 254 deals in 2021 compared with 99 in 2020.

Payments, according to the report, was the second-most popular category for US investors, as 167 companies received funding in 2021 in the APAC region. Warren Buffett-owned Berkshire Hathaway Inc., for instance, invested in Alibaba Group Holding Ltd. and SoftBank Corp.-backed One97 Communications Ltd., or Paytm, which became India's biggest ever IPO when it raised $2.47 billion in November 2021. CLICK HERE FOR THE CHART

"India's payment companies were a big focus for some US investors. For example, Y Combinator and U.S.-based investment firm Tiger Global Management LLC both backed Razorpay Software Pvt. Ltd. in 2021, while Tiger Global funded Resilient Innovations Pvt. Ltd. which operates as BharatPe, and PhonePe Pvt. Ltd. The country's payment landscape has become increasingly competitive, with local industry giant Reliance Industries, Alphabet Inc.'s Google Pay and Facebook-owner Meta Platforms Inc. all vying for a share of the burgeoning market," wrote Rebecca Isjwara, Priyanka Boghani and Rehan Ahmad of S&P Global Market Intelligence.

Asia Pacific venture capital activity, according to Refinitiv data, totaled $152.2 billion across 6,272 transactions in 2021, translating into a 106.9 per cent increase in value terms and 69.1 per cent in volume terms compared to 2020.

"China leads the Asia Pacific nations with $83.3 billion, a 65.5 per cent increase from full year 2020. India followed with $36.5 billion, up 216.9 per cent from a year ago. Singapore rounded out the top 3 with $7.9 billion, up 224.4 per cent from full year 2020," the Refinitiv report said. CHECK HERE

Those at S&P Global Market Intelligence, on the other hand, believe venture capitalists are likely to continue to invest in APACs fintech space going ahead, as many are set to either exit via IPOs or expand through strategic acquisitions.

Twitter: @Pun_ditry