US-based Trade Finance Company Drip Capital Raises $25M Series B

SME-focused trade finance firm Drip Capital has raised $25 million in Series B funding led by Accel Partners with participation from existing investors Sequoia India, Wing VC, and Y Combinator. New investors in this round include institutional investor platform Trusted Insight and GC1 Ventures. The company has raised over $45 million of equity to date and $55 million of debt, taking the total funding to $100 million.

Raised in India, Drip’s Co-founder and Co-CEO Pushkar Mukewar saw the difficulties faced by small businesses in developing markets, particularly when it comes to raising money. His stint at Capital One helped him understand how data and technology can be leveraged to fill credit gaps for underserved sections of the market. During his MBA days at Wharton, University of Pennsylvania, Mukewar ended up rooming with Co-founder and Co-CEO Neil Kothari, who comes from extensive experience in the capital market with global firms like Blackrock and Goldman Sachs. Their experiences helped them articulate a vision to bring trade finance to SMEs in emerging markets, inspiring the idea behind Drip Capital in 2016.

Trade finance is an age-old paper-based industry dominated by banks that primarily focus on large, established corporate customers. Hence, small businesses are largely neglected by traditional lending institutions, despite accounting for 50% of merchandise exports from India.

Mukewar saw this as a huge opportunity to offer trade finance to SME exporters in emerging markets and bring them to a level playing field in global trade. Explaining further, he said, “The trade finance gap is $1.5 trillion globally. That is $1.5 trillion of trade that should happen but does not due to lack of working capital in the SMEs space. This is the problem that Drip has set out to solve.”

Drip uses technology and electronic data to underwrite and finance cross-border B2B transactions with the click of a button. Using a digital-first approach, Drip’s cost of serving customers is dramatically lower than that of traditional lending institutes, which rely on high-touch customer interactions and manual underwriting processes.

A Mumbai-based exporter of steel products, and a Drip Capital customer since 2017, Siddharth Gupta, Director, Isinox Limited, says, “Due to the limited bank facilities available to us as a mid-sized exporter, our business started stagnating. With its collateral-free finance solution and an online approach to trade finance, Drip gave us the flexibility to service more orders which helped increase our revenue considerably.”

Since its launch in India, Drip’s business model has showcased tremendous potential with a 10x growth rate in the last two years. The company has already funded more than $500 million of global trade by 400+ exporters, and by 2020, Drip aims to fund $1 billion worth of trade originating from India alone.

With the new round of funding, Drip Capital expands its global footprints, starting from the United Arab Emirates and Mexico.

“Small businesses are a key driver for economic growth and employment around the globe. As Drip expands to new geographies, the company has an opportunity to accelerate development across these markets. Drip has already partnered with government organizations in India and Mexico to educate and promote our alternate form of financing,” adds Neil Kothari, Co-founder and Co-CEO, Drip Capital.

Additionally, Drip is also planning to invest in technology and product development, as well as use the funds to grow its talent pool. At present, Drip employs over 120 people across its global offices in Palo Alto, Mumbai, Bengaluru, Delhi, Dubai and Mexico City.

Elaborating on the fundraise, Abhinav Chaturvedi from Accel Partners says, “We have been associated with Drip since its inception. The company’s technology and data-driven business model has helped Drip’s business offering grow in the last two years. With the fresh round of funds, we are glad to be a part of Drip’s new innings – its international expansion.”

About Drip Capital: Drip Capital was founded by Wharton alums and roommates Pushkar Mukewar and Neil Kothari in 2015, with an aim to simplify trade// finance for SMEs by providing collateral-free credit. Drip Capital offers technology-enabled solutions to rebuild core parts of international trade finance infrastructure and make underwriting and finance of international B2B transactions seamless for small businesses through invoice factoring/bill discounting.

Drip has financed over $500 million of the international trade originating from India and has strategic partnerships with key organizations like the Federation of Indian Export Organizations (FIEO). The company finances exporters in 70+ cities across India, shipping goods to buyers in over 60 countries