Drip Capital Hits $1 Billion Breakthrough In Trade Financing For Small Businesses

Credit And Finance For MSMEs - Supported by Y-Combinator and small & medium enterprise-centered trade finance company, Drip Capital has recently been reported of a crossover of $1-billion in overseas trade receivables funding transactions through its finance platform. Drip Capital was established in 2015 with an agenda of facilitating global trader’s funding needs by providing post-shipment finance on the worth of the exporter’s invoice while the bill of lading is issued. Bill of lading is a legal document that contains the details of the ordered goods & services’ types, quantity, and place where the merchandise is being carried. The exporter is supposed to pay a one-time processing fee along with a factoring fee charged for every bill of lading and interest that can range between 4.5 percent and 9 percent per year.

Pushkar Mukewar, Co-Founder and CEO, Drip Capital told Financial Express Online explained, “As India relaxed its lockdowns and demand started returning from consumer-oriented economies such as Europe and the US, MSMEs need for working capital has increased. This further underscored the need for alternative financing solutions like the ones Drip Capital provides. The company has recorded a 50 percent quarter-on-quarter growth in the last three quarters”.

Different from other financial institutions, Drip Capital professed to get the benefit of data analytics and technology to guarantee credit. Currently, it is operating with over 1500 exporters and importers on the worldwide levels as well as more than 700 exporters across 60 cities in the nation as claimed by the company. In addition to this, the company has also hit nearly $200 million in equity and debt since 2016. Except Y Combinator, other investors of the company include mainly Accel Partners, Sequoia Capital, and Wing VC.

The government has also been encouraging various MSMEs to consider the TreDS platforms which include the Receivables Exchange of India, M1 Xchange, and Invoicemart to get the worth of their bills of lading and facilitate the issues of working capital. It had also abandoned the fee worth Rs. 10,000 in September 2020 for introducing the TreDS platforms till March 2021. Apart from this, the government had also initiated a new portal for the registration of MSMEs. For example, Udyam Registration with TReDS and government e-commerce platform GeM for effective transactions. The Ministry of MSME had also urged various private firms to get engaged with TreDS to address the delayed payment complexities, as it was made compulsory for all the CPSEs and corporates with more than Rs 500 crore turnover by the government.