Funding halves for digital lending startups

VCs cite pricing correction for investment dip

- AYANTI BERA

FUNDING FOR LENDING startups has halved this year as investors pull back on valuations and adopt a more selective approach to capital deployment, even as demand for digital credit continues to grow sharply.

Venture capitalists say the slowdown reflects a correction in pricing and deal structure rather than weakening fundamentals in the lending business.

Data from Venture Intelligence shows investments into lending startups fell to about $752 million so far this year, down from $1.53 billion in 2024. Deal volumes also declined to 53 from 69 in the previous year. Despite the drop, lending remained the largest contributor to fintech deal activity, accounting for 40% of the 134 fintech deals recorded this year.