Palo Alto and Mumbai-based SME lending startup Drip Capital has raised $25 Mn in a Series B funding round. The investment was led by Accel Partners with participation from existing investors Sequoia India, Wing VC, and Y Combinator. New investors in this round include GC1 Ventures and institutional investor platform Trusted Insight.
The funds will be used to expand its global footprint, launching in the United Arab Emirates and Mexico in 2019. Till date, the company has raised $100 Mn.
Founded in 2014 by Pushkar Mukewar and Neil Kothari, Drip Capital aims to simplify trade finance for SMEs by providing collateral-free credit. The company uses electronic data and technology to rapidly underwrite and finance cross-border B2B transactions.
The company offers working capital to exporters a credit line, which ranges from $100K-$2.5 Mn, depending on the exporter’s size and requirement. The financing is unsecured and offered without any collateral.
Drip uses electronic data and an automated risk assessment platform, and claims to ensure a turnaround of 48 to 72 hours. The company claims to have funded more than $500 Mn of trade across more than 400 exporters. “By FY 2020, Drip aims to fund $1 Bn of trade originating from India,” says Neil Kothari, cofounder and co-CEO, Drip Capital.
At present, the Y Combinator-backed company is working with over 400 SMEs in India and has strategic partnerships with export promotion councils, freight forwarders, shipping lines, other fintech companies and banks.
The trade finance gap currently stands at $1.5 Tn globally – the majority of which is amongst small business exporters in emerging markets. India exports $140 Bn worth of goods and roughly 40% of the exporters are small or medium-sized businesses.
In the trade finance industry, one of the global players Modifi has recently launched its operations in India. The company aims to do $1 Bn worth of volumes in India in 2022.
DataLabs by Inc42 said that between 2015 and Q1 2019, the total investment in Indian fintech startups was $7.62 Bn with a total deal count of 478. Out of the total funding, 25.49% ($1.94 Bn) investment came in lending tech startups.