Bengaluru: Trade finance firm Drip Capital has raised $25 million in a Series B funding led by Accel with participation from existing investors, including Sequoia India, Wing VC, and Y Combinator. New investors in this round include GC1 Ventures and institutional investor platform Trusted Insight. The company has raised over $45 million in equity to date and $55 million in debt, taking the total funding to $100 million.
Drip Capital uses technology to provide working capital to small companies and entrepreneurs. The trade finance gap currently stands at $1.5 trillion globally, the majority of which is among small business exporters in emerging markets. This means $1.5 trillion of trade does not happen due to a lack of access to working capital.
“We empower small companies and entrepreneurs in emerging markets whose export volumes range from $100,000 to $40-50 million a year. We focus on 10 different industry segments such as agro commodities, readymade garments and industrial goods, and stay away from gems and jewellery and perishables (fruits and vegetables)," Pushkar Mukewar, co-founder and co-chief executive, Drip Capital, told Mint in an interview.
According to Mukewar, trade finance is an age-old paper-based industry dominated by banks that primarily focus on large, established corporate customers. “Hence, small businesses, despite accounting for 50% of merchandise exports from India, remain largely neglected. Our mission is to level the playing field for these small business exporters, not just in India but across emerging markets," he said in a statement.
The company uses electronic data and technology to rapidly underwrite and finance cross-border B2B transactions.
Since its launch in India in 2016, 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 trade across 400 plus exporters. “By FY2020, Drip aims to fund $1billion of trade originating from India. With the new round of funding and a proven model, the company is planning to expand its global footprint, launching in the UAE and Mexico in 2019," Mukewar added.
Drip Capital has strategic partnerships with a number of key export promotion organizations, including the Federation of Indian Export Organizations (FIEO) and the Engineering Export Promotion Council (EEPC). According to Mukewar, the company is now looking to create more products and services for its exporting clientele to help them better improve their businesses, which would mostly include the likes of hedging and forex products.