Mumbai: Fintech startup Drip Capital, which provides working capital finance to small and medium enterprises (SMEs) engaged in cross-border trade in emerging markets, has raised $15 million in a Series A round from venture capital firm Accel Partners, Sequoia India and Wing VC, a Silicon Valley based venture fund.
The round also saw the participation of its existing investors, including US seed accelerator Y-Combinator, among others. Drip Capital had raised $5-million in seed money in 2015, besides securing an undisclosed amount in debt capital from Silicon Valley Bank, a subsidiary of the California-based SVB Financial.
With the recent funding, the California-based fintech startup plans to scale up operations in India and replicate the model in other geographies. Drip started with India operations as the first exporter market and experienced strong demand. In the last 18 months of operations, it has funded over $100 million in trade flows across industries, the company said.
“Drip comes at a crucial time for Indian exporters with a slowdown in bank lending and delays in goods and service tax (GST) input tax credit refunds. The working capital gap is quite pronounced in India, where SMEs contribute to 40% of exports," said Pushkar Mukewar, co-founder and co-chief executive of Drip.
The company uses alternative data and technology to underwrite and finance cross-border trade transactions to provide working capital to SMEs.
Founded by Mukewar and Neil Kothari in 2014, Drip’s team comprises engineers, data scientists and trade finance veterans across its four offices—the headquarters at Palo Alto, besides its Mumbai, Delhi and Bengaluru units.
“With a partner like Drip Capital, emerging market exporters now never need to say ‘no’ to a new order due to working capital constraints," said Mohit Bhatnagar, managing director, Sequoia Capital India Advisors. “This offers a huge boost to small and medium businesses, which play a significant role in India’s trade network. Sequoia India is proud to partner with Neil and Pushkar on this journey."
The company’s main office in California largely focuses on raising debt from US markets and other accredited investors. “India is a major market for us. We are aiming to expand to other international geographies as well. We are sector agnostic, however, there are some sectors that we would avoid lending to such as gems and jewellery, highly perishable commodities and sensitive sectors like arms and ammunition," Mukewar added.
“With a cross border presence and expertise in data science and credit, we believe, Drip’s team is well-positioned to capitalize on the global trade finance opportunity," said Jeff Schneble, partner at Wing VC.
Wing VC is a US-based early stage tech-focused venture capital fund founded by former managing partner at Accel Partner, Peter Wagner and former partner at Sequoia Capital, Gaurav Garg.