New Delhi, Jan 4 (IANS): India's fintech sector saw funding plunge 63 per cent in 2023 -- at just $2 billion -- from $5.4 billion raised in 2022, a report showed on Thursday.

InCred was the only unicorn created in 2023, while the fintech sector saw 31 acquisitions and two IPOs.

Only five $100 million+ funding rounds took place last year.

India ranked third globally in 2023 in terms of fintech startup funding, strengthening its position as a significant player on the global stage, according to the report by Tracxn, a leading market intelligence platform.

Alternative lending, payments and banking-tech were the top-performing segments in the Indian fintech sector.

Alternative lending received a funding of $835 million in 2023, down from $2.28 billion in 2022.

The BNPL segment saw significant growth due to its adoption within the country, which contributed to the growth of the sector, said the report.

“Despite a 63 per cent decline, our sector stands strong as the third-highest funded ecosystem globally, affirming its position as a hub of innovation. The implementation of regulatory measures and the government's commitment to digitalisation have set the stage for a promising future,” said Neha Singh, co-founder at Tracxn.

Late-stage rounds in 2023 secured $1.4 billion in funding, reflecting a 56 per cent drop compared to the $3.2 billion raised in 2022.

Early-stage rounds faced a similar trend, with funding plummeting to $489 million, marking a stark 73 per cent decline from the $1.8 billion raised in 2022, said the report. Seed-stage rounds were also not immune to this downward trajectory, securing $145 million, a 69 per cent drop compared to the $474 million raised in the preceding year.

Peak XV Partners, Y Combinator, and LetsVenture were the top investors in the space.

Two companies, Zaggle and Veefin, announced IPOs in 2023, compared to five companies that went public in 2022.

Bengaluru emerged as the leader in total Fintech funding raised in 2023, followed by Mumbai and Jaipur, said the report.