The funding that went into investment tech start-ups in India spiked sharply in the January-May period in 2021. The amount invested was nine times higher than the funding that went into the space during January-May 2020.
According to data from Tracxn, a total of $145.5 million went into 14 firms during the first five months of this year as against $16.2 million into 11 firms during the same period last year.
April and May, this year, particularly saw an influx of funding in this space — in April, $83.2 million went into the investment tech space and in May, the sector garnered $55 million. Incidentally, this was the period when there was a surge of the second-wave Covid infections in the country.
Coping with the pandemic
More than a year into Covid, businesses have learnt to cope with it. That is why even during the peak of the second wave funding was carried on unabated, said Bhaskar Majumdar, Managing Partner, Unicorn India Ventures.
“Investors realised that the pandemic would eventually come under control on the back of vaccination. This has been seen in countries of high vaccination like the UK, the US and Israel. Once this happens, slowly businesses would come back. Armed with this knowledge, investors were confident to go ahead and back solid business models of tech platforms,” Majumdar said.
Rise in number for firms
Incidentally, 2020 also saw the highest number of firms founded in the investment tech space since 2016, per data from Tracxn; 175 new start-ups sprung up in this segment last year. Experts said that Covid has played a big role in accelerating and changing the preference of how people invest — people are now looking for easily understandable and accessible, touch-less methods for investments. This shift in choices is becoming a huge driver for digital platforms that specialise in this value proposition. Among the firms that garnered the highest funding this year are Groww, Mensa Brands, Marquee Equity, Stockal and Wint Wealth.
“Over the last few years, we have seen fin-tech disruptions going in deeper into the financial services industry. Investment tech is a natural fit for this disruption due to changing demographics and increasing interest in equities, mutual funds and new investment avenues as opposed to traditional avenues like gold, land, fixed deposits, etc. Increasing funding into investment tech start-ups is a combination of capturing this future potential,” said Sandeep Mishra, Vice-President, Research and Investments, Zephyr Peacock India, adding “There is a demand for easy to understand, easy to access, easy to execute and DIY investment and insurance products. The increased funding interest is reflective of this.”
“While March 2020 would have brought the opportunity into awareness, the first peak solidified the trend and by April and May, the industry has acted upon the trend and opportunity available,” Mishra said.