Drip Capital Inc., a startup that specializes in financing cross-border trade by small and medium businesses, raised $175 million from equity and debt investors to fuel its growth. The round includes $40 million in equity funding led by San Francisco-based TI Platform with participation from existing backers including Accel, Sequoia Capital and Wing VC, the company said in a statement Thursday. It also obtained $135 million in debt facilities from Barclays Investment Bank and East West Bank, bringing the total funds raised to date to $525 million.
The company, founded by Pushkar Mukewar and his Wharton MBA classmate Neil Kothari, funds small and medium companies’ cross-border transactions. It plans to work with the likes of shipping lines, payment processors and insurers to further help companies conduct international business. Global trade finance will be a $10 trillion market by 2026, Alex Bangash, managing partner at TI Platform, said in the statement.
The startup uses machine learning and cloud technology to make creditworthiness decisions and help companies obtain working capital. It offers the bulk of its collateral-free credit services in India and also works with companies in the U.S. and Mexico. The company finances transactions between 3,500 sellers and buyers in 80 countries and will use the fresh funds to invest in technology and expand in Asia and Latin America.
“Ours is a solution for small businesses which struggle to fund raw material purchases from overseas suppliers or have to wait 90 days or more to get paid by their buyers,” Mukewar, the chief executive officer, said in a Zoom interview. “These businesses are un-served or underserved by traditional channels like banks that require hard collateral and financial statements.”
Drip uses technology to assess each transaction on criteria such as the buyer’s creditworthiness, the seller’s performance risk and the specific risks of each deal. Its algorithms factor in information such as customs and tax data as well as shipping line manifests. It also aggregates data from credit rating providers and insurers.
“In the longer run we’ll look to solve other challenges exporters and importers face, such as forex handling, insurance and commerce,” Mukewar said.
Of Drip’s 250 workers, about 200 are in Mumbai where its technology is developed, and the rest in locations including Mexico City and Palo Alto, California.