IIFL Fintech Fund, backed by the IIFL Group, has closed its second fund at Rs 500 crore ($55 million), as it looks to back early- to growth-stage startups in the sector, per media reports.
The fund will particularly focus on companies using generative artificial intelligence to build financial services products.
It is understood to have garnered commitments from domestic family offices and high-net-worth investors.
The fund aims to invest in 20-25 startups, with roughly 20-25% of the corpus reserved for follow-on investments in the top performers from its first fund.
IIFL Fintech made headlines early last year when it announced the first close of its second fund at Rs 200 crore.
The fund has already invested in five startups, including education-focused fintech GrayQuest, voice AI company Fundamento, banking infrastructure startup Knight Fintech, and a secondary share purchase in document infrastructure firm Leegality, among others.
Established in 2021, IIFL Fintech closed its first fund at Rs 200 crore in 2022. Its portfolio includes Leegality; FinBox; DataSutram; Insurance Samadhan; and TrustCheckr, which was later acquired by Truecaller.
Fintech as a sector is witnessing strong traction in India, driven by growing digital adoption, rising demand for financial inclusion, and innovation in payments, lending, and wealth management. Investors continue to show keen interest across early- to late-stage startups.
While most leading VCs in India invest across sectors, other funds that focus specifically on fintech include Quona Capital and Cedar‑IBSi Capital.
In total, PE-VC firms raised at least $10.97 billion as of December 17, 2025, a jump of nearly 52% from $7.19 billion in 2024.
