Credit and Finance for MSMEs: Cross border trade financing platform for small and medium enterprises (SMEs) on Thursday announced $175 million funding including $40 million investment in Series C round and a separate $135 million in warehouse debt facilities. The latest round takes the company’s total investment to around $525 million in a mix of equity and debt. The $40 million investment was led by San Francisco-based TI Platform along with participation from new and existing investors such as Accel, Sequoia, Wing VC, Irongrey, and GC1 Holdings. Of the $135 million funding, $100 million warehouse credit facility was raised from Barclays Investment Bank while the rest $35 million came from with California-headquartered East West Bank (EWB).
“The new capital will be deployed towards scaling our trade financing business in India which is a major market for Drip. Besides this, over the next 18 months, we plan to invest heavily in technology, products, and talent which will assist us in accelerating our go-to-market strategy across our existing and new geographies like South Asia and Latin America,” Pushkar Mukewar, CEO/Co-founder, Drip Capital told Financial Express Online.
Drip Capital, which was launched in 2016 to finance cross-border transactions to help SMEs release working capital tied up in invoices, is also looking at a new platform that would address challenges faced for SMEs while partnering with businesses in shipping lines, payment processors, insurance providers as part of the value chain. “A new trade facilitation platform is currently in the pipeline, which will provide a one-stop solution for MSMEs opting for cross-border transactions,” Mukewar added.
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The company claimed to have financed over $2 billion of global trade transactions across over 80 countries as it serves SMEs in Mexico and US as well apart from India using machine learning and cloud technology. “Global Trade Finance is expected to be a $10 trillion market by 2026. Drip is comfortably established as the market leader in this space, providing SMEs with vital access to financing. Based on strong unit economics, powerful tech-driven underwriting, and growth trajectory, TI Platform considers it as a good candidate for breakaway upside,” Alex Bangash Managing Partner, TI Platform.
Importantly, Gujarat’s Gift city-based International Financial Services Centres Authority (IFSCA) had issued licenses to four invoice discounting platforms in India including KredX, Vayana Network, M1xchange, and RXIL for carrying out international trade financing services for exporters and importers. IFSCA is a unified government authority for the development and regulation of financial products, financial services, and financial institutions in the International Financial Services Centre (IFSC) in India.
According to a report by the Standing Committee on Finance laid in Rajya Sabha in February this year on the factoring bill, the share of factoring credit in total formal MSME credit in India was 2.6 per cent in comparison to 11.2 per cent per cent share in China. Moreover, India’s factoring market share in the country’s GDP was 0.2 per cent share while China’s market share in its GDP was 3.2 per cent and 4.1 per cent for Brazil.
