APAC Fintech Funding Dip by 58.5% in Q1

Anil Prabha

July 12, 2020

APAC Fintech Funding Dip by 58.5% in Q1

The amount of venture capital raised by financial technology (fintech) companies in the Asia-Pacific (APAC) region dropped 58.5% consecutively to $1.3 billion in the first quarter, according to the latest report by S&P Global Market Intelligence. India-based companies attracted the most funding, collectively raising 42.9% of total fintech funding in Asia in the same period.

While India surpassed China both in terms of deal value and volume during the first three months, the outlook for fundraising activities in India in the near term is likely to be subdued as it clamps down on foreign investments from neighboring countries. Asia Blockchain Review managed to catch up with Celeste Goh, Fintech Analyst at S&P Global Market Intelligence for her thoughts on things.

Coming to the report “Amid Q1 APAC fintech funding slump, payment companies drove investments”, it seems interesting that India-based companies attracted the most funding. Please elaborate on this.

China and India have in the past, taken turns at claiming the title of APAC’s top fintech fundraising hub. As China has been impacted by the pandemic earlier on since Q4 last year, investor sentiment in the country was likely affected going into 2020, so it is perhaps unsurprising to see India taking the lead in fintech funding in the first quarter.

Within India, digital lenders and payment companies drew in the most venture capital amounting to $217 million and $204 million respectively in Q1. Inflows into the fintech lending sector was led by MoneyTap which raised $70.2 million in a series B round in January. The consumer lending firm intends to use the proceeds to scale up its operations and expand its geographical footprint from 60 to 200 Indian cities.

In the payments sector, BharatPe raked in the largest amount of capital with $74.2 million raised in a series C round in February. BharatPe is a payment company that enables offline merchants to accept mobile payments from any United Payment Interface (UPI) payment app. It also provides working capital loans to its merchants, which is a key revenue pillar for its business as India’s elimination of merchant discount rates mean that payment providers are not able to generate revenue from payment transactions.

The Big Picture In India

India-based fintechs raised a total of $543.4 million, accounting for 42.9% of total Asia-Pacific fintech funding in the first quarter. While India saw the largest dip in fintech investments from the previous quarter, this was largely due to the absence of mega funding rounds. In November and December 2019, One97 Communications Ltd., the parent company of Paytm, pulled in $1.7 billion over two fund raises. Excluding these transactions, investments in India-based fintechs in the first quarter would have grown by 17.9% sequentially.

The outlook for fundraising activities in the near term is likely to be subdued. India, which has been on a stringent lockdown since March, is clamping down on foreign investments from neighboring countries including China. The move was initiated to prevent opportunistic takeovers of Indian corporates at a time of crisis when asset prices are depressed. Foreign investments are now subject to mandatory government clearance, which may stem new capital inflows.

Be sure to check out our next part in this exclusive Interview with Celeste Goh soon!

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About the author
Anil Prabha

Editor In Chief

Anil started his career in journalism all the way back in 2003. After traversing the sphere of editorial, corporate communications and advertising, he has now come full circle and is back in the world of journalism. He believes in the power of the written word, and its ability to enthrall, delight and inform the reader.

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