[Funding alert] Digital financing startup Drip Capital raises $25M in Series B funding from Accel and others

Palo Alto- and Mumbai-based fintech firm Drip Capital on Wednesday said that it has raised $25 million in Series B funding led by Accel with participation from existing investors Sequoia India, Wing VC, and Y Combinator.

New investors in this round include the US-based GC1 Ventures as well as institutional investor platform Trusted Insight. With this round, the company has raised over $45 million of equity (across four deals) till date and $55 million in debt funding.

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In a conversation with YourStory, Pushkar Mukewar, Co-founder and co-CEO, Drip Capital, said that the company will use the funds across three primary focus areas including – geographic expansion in international markets of Southeast Asia as well as Latin America, developing new financial products, and doubling the head count of its product engineering teams.

At present the company has 25 product engineers, and the total team of 120 members spread across six offices. 

Being a digital trade financing company, Drip Capital uses technology to provide small business exporters the working capital they need to grow their business.

Pushkar points out that the lifecycle of an international trade transaction for an SME exporter is 120 days, which can starve the business of working capital. Hence, Drip Capital acts as a bill discounting platform where the money (due to the exporter) is released immediately (to the exporter against the invoice) after the goods are shipped.

The goods are usually shipped after 60 days from the date of the order. Drip collects the money from the importer which is due to the exporter. The platform’s customers include SMEs that export anywhere between $100,000 and $50 million in trade annually.

On plans for the funds raised, Pushkar said,   

“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 percent 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 around the world.”

While the platform’s offering is focussed on the niche use case of exports, the company is also piloting newer credit products that will also provide exporters working capital to fund their raw material supplies.    

The founders claim that the new product is expected to be formally rolled out in the next six months.

“With an automated system, Drip provides a seamless customer experience and can finance a shipment with the click of a button. On the backend, Drip integrates with multiple electronic data sources and has built proprietary algorithms to underwrite the risk of every shipment,” adds Neil Kothari, Co-founder and co-CEO, Drip Capital.

Until now, the company has discounted invoices and provided capital against $500 million of trade across 8000 transactions concluded by more than 400 exporters.

“By FY 2020, Drip aims to fund $1 billion 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,” Pushkar adds.

The platform makes its revenues by charging a flat fee and an interest rate on the working capital provided. The ticket sizes of loans on the platform vary from $100,000 to $2.5 million without any collateral, depending on the exporter’s size and requirement.  

Elaborating on the fundraise, Abhinav Chaturvedi from Accel says,

“We have been associated with Drip since its inception and have participated in all their funding rounds till date. It has been inspiring to see the company’s progress in the last two years. We are excited to support them in their next phase of growth as they take their business model global.”

The company was founded in 2014 by Pushkar and Neil, roommates at Wharton Business School. At present, Drip has offices in Palo Alto, Mexico City, Dubai, and three offices in India - Mumbai, Delhi, and Bengaluru.

(Edited by Evelyn Ratnakumar)

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