Indian RegTech Funding Plummets 43% in 2024 as Investors Shift Focus to Smaller Deals

In 2024, the Indian RegTech sector experienced significant changes in funding and investment dynamics, marking a notable shift in the landscape for regulatory technology companies. As investors become more selective, the overall funding for RegTech in India fell sharply, reflecting broader economic uncertainties.

Decline in Indian RegTech Funding

The Indian RegTech funding landscape witnessed a dramatic decline of 43% year-on-year (YoY) in 2024. Here’s a closer look at the key statistics:

• Total funding reached $131 million, down from $231 million in 2023.
• The number of deals dropped to 22, an 8% decrease from the previous year’s 24 deals.
• Despite the decline, funding remains significantly higher than in 2020, when only $23 million was raised across 19 deals.

This downturn highlights the increasing challenges faced by RegTech firms in attracting large investments, largely due to evolving regulatory requirements and economic conditions.

Average Deal Value Drops

Another significant trend in 2024 was the drop in the average deal value:

• The average deal size fell to $6 million, a 39% decline from $9.6 million in 2023.
• This is still a considerable increase compared to the $1.2 million average seen in 2020.

This shift towards smaller deals indicates that investors are prioritizing established companies with proven solutions over early-stage startups, which may struggle to secure substantial funding in this cautious environment.

IDfy Leads the Way in RegTech Investments

Amidst the overall decline, IDfy, a prominent player based in Mumbai, secured one of the largest funding rounds in the Indian RegTech sector, raising $27 million. This funding was backed by notable investors including Elev8, KB Investment, and Tenacity Ventures.

IDfy specializes in fraud prevention and trust establishment, employing AI and machine learning to facilitate over 2 million verifications daily. Established in 2011, IDfy caters to more than 1,500 clients across various sectors, including BFSI, e-commerce, and FMCG, with high-profile clients like HDFC Bank, Zomato, and American Express.

The new influx of funds will aid IDfy in expanding its services and enhancing product development, solidifying its presence not only in India but also in Southeast Asia and West Asia.

Future Outlook for Indian RegTech

As the Indian RegTech sector evolves, firms must demonstrate robust compliance capabilities, scalable business models, and resilience to regulatory changes to secure future investments. The ability to adapt to these market dynamics will be crucial for maintaining investor confidence and promoting long-term growth.

For more insights into the regulatory technology landscape, visit RegTech.com.