Drip Capital secures massive $113m funding to dominate global trade finance

Drip Capital, a digital trade finance platform headquartered in Palo Alto, California, with significant operations in India, has raised $113 million in a new funding round. This capital infusion includes $23 million in equity from Japanese institutional investors, GMO Payment Gateway and Sumitomo Mitsui Banking Corporation, and $90 million in debt financing led by the International Finance Corporation and East West Bank. The latest funding brings Drip Capital’s total capital raised to approximately $640 million, encompassing both equity and debt financing. This marks a major milestone in the company’s ambitious plan to revolutionize global trade finance for small and medium-sized businesses.

Accelerating Expansion in the Global Trade Finance Arena

Founded in 2016 by Pushkar Mukewar and Neil Kothari, Drip Capital has carved a niche by offering collateral-free working capital solutions to small and medium-sized businesses engaged in cross-border trade. The platform facilitates trade financing by providing flexible credit options, allowing these businesses to better manage cash flow and scale operations. Operating primarily in India and the United States, the company serves over 9,000 sellers and buyers across more than 100 countries. With its stronghold in these two major markets, Drip Capital is now poised for a global expansion.

The new funding is expected to expedite this market expansion and support the development of innovative products tailored to customer needs. Drip Capital has already extended its offerings beyond trade finance, launching foreign exchange and raw material procurement support services. The company envisions becoming a comprehensive global trade financing and facilitation platform, providing end-to-end solutions for cross-border traders. CEO Pushkar Mukewar emphasized that the new funding would help accelerate this vision and reinforce their market presence.

Leveraging Debt to Drive Business Growth

Drip Capital’s business model is heavily dependent on debt, which it uses primarily to finance the assets on its platform. This approach has allowed the company to grow its annual trade funding volumes to between $1.8 billion and $2 billion. The strategic use of debt has enabled Drip Capital to scale rapidly, providing much-needed capital to SMBs across various sectors. Mukewar stated that the company has achieved cash profitability and intends to double its revenue in the next two years while maintaining a steady growth rate of 40%.

Strategic Focus on India and the United States

With most of its business originating from India, Drip Capital has a significant operational presence in the country. Approximately 90% of its employees are based in India, underscoring the country’s importance in the company’s growth strategy. However, the company also focuses heavily on the U.S. market, given the vast opportunities in both regions. Mukewar highlighted that Drip Capital aims to deepen its presence in India and the United States, while exploring opportunities to expand into new regions in the long term. The strategic focus on these two critical markets is expected to provide a strong foundation for future growth.

Expert Opinion: Drip Capital’s Future in Global Trade Finance

Industry experts believe that Drip Capital is well-positioned to become a leader in the global trade finance space. The combination of its innovative digital platform, strong investor backing, and a strategic focus on high-growth markets gives it a competitive edge. The participation of renowned institutional investors like GMO Payment Gateway, Sumitomo Mitsui Banking Corporation, and the International Finance Corporation in this latest funding round signals strong confidence in the company’s potential.

Financial analysts suggest that Drip Capital’s approach to leveraging debt for growth, coupled with its commitment to expanding its product offerings, sets it apart from traditional trade finance providers. By focusing on technology-driven solutions and diversifying its service portfolio, Drip Capital is creating a unique value proposition for small and medium-sized businesses engaged in international trade.

Future Prospects and Challenges

As Drip Capital looks to scale further, it faces challenges, including regulatory compliance, competition from established players, and the need for continuous innovation. However, the company’s strong track record, significant capital backing, and clear strategic direction provide a solid foundation to overcome these hurdles and continue its upward trajectory in the global trade finance market.