Alt lending, and, of course, digital payments, were top of mind for investors targeting India FinTechs these past few weeks. We take stock of two quarters and the YTD — and some triple digit funding rounds — amid the country’s changing financial services landscape.
In all corners of the globe, the payments ecosystem is changing, marked by evolution and revolution.
That’s especially true in India, where digital payments are being embraced by consumers and merchants alike. The ubiquity of smartphones is driving the growth, and large financial services firms are linking with government initiatives and tech-nimble upstarts to change the way everything from corporate banking to lending is done.
In the latest edition of the India FinTech Tracker, we spotlight the deal-making that spans hundreds of millions of dollars, flowing into verticals as diverse as food delivery, retail payments, microfinance, P2P and the Internet of Things.
The Headline Numbers…Thus Far
Tracked by PYMNTS, as measured through the end of this week, with September in sight: FinTech investments total roughly $722 million. By way of comparison, through the first three quarters of 2018, FinTech investments stood at $2 billion.
In terms of headline numbers for 2019, and breaking down the quarter-by-quarter progress, FinTech investments were $101 million in the first quarter across 46 deals, increasing to more than $137 million in the second quarter of this year through 51 deals.
But according to the data, the pace appears to be quickening — through the third quarter (to date), investments worth as much as $484 million have been inked.
The Sectors
Drill down a bit, and certain sectors are clearly in favor as measured by fund flow. With the caveat of a month left to the quarter, alternative finance has seen $208.4 million in investments, compared to a bit under $100 million seen through the first three quarters of 2018. Mobile money firms, as a group, have attracted $110 million in capital YTD in 2019, where investments had totaled $63 million through the first three quarters of 2018.
Snapshots are frozen in time, of course, and a sudden surge of interest — even a single investment — can tip scales heavily in one subsector’s favor (as measured against another).
The Investments
Keep in mind that the data do not reflect investments such as might be seen with companies that straddle all manner of functions such as logistics. Rather, we’ve trained the radar on emerging plays such as alternative finance, banking, digital wallets and P2P — firms that transform the ways commerce is conducted among consumers and enterprises.
To that end, among the standouts:
Pine Labs, with operations in India (but incorporated in Singapore) received the equivalent of $102 million from its parent company to acquire Qwikcilver, per an agreement earlier this year. Under the terms of that agreement, Pine Labs had agreed to buy the gift card solutions provider for $110 million, with the added funds beyond the $102 million coming from existing investors. Pine Labs has said that it is used by merchants across 3,700 cities and towns in India and Malaysia. The news comes on top of $82 million worth of funding that had come from funds including Actis and Altimeter Capital in 2018.
In more recent news surrounding Pine Labs: IBSintelligence.com said that it has boosted its network offering EMI (also known as equated monthly installment) solutions on credit and debit cards to 85,000 merchants and consumers across 120,000 stores in India.
Separately, in a similar infusion of funding from a parent company, PhonePe, which operates as a digital payments company in India, received the equivalent of $101.5 million from its own parent firm based in Singapore. PhonePe is known as Flipkart’s digital payments arm. Flipkart, for its part, has said it would commit $500 million to grow PhonePe, which has said it has 150 million users. PhonePe earlier this year had gotten approval from Flipkart to operate as a separate entity.
In other notable deals that shine a spotlight on the emergence – and adoption – of digital payments, earlier this month, Lendingkart, which focuses on extending capital to small, mid-sized and micro businesses, raised $30 million as part of a Series D funding round. Among the existing investors that funded the round are Fullerton Financial Holdings, Bertelsmann India Investments and India Quotient. The company has said that it has issued 60,000 loans to roughly 55,000 firms across 1,300 cities in India.
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