smbs drip capital
Drip Capital: Revolutionizing SMB Trade in Emerging Markets
Small businesses have various credit problems. A lot of fintech startups have emerged to help this group, which they believe isn't getting enough help from big banks, solve this problem. Check out the Trade Finance Advice website to know how SMBs Drip Capital simplifies trade financing.
A Brief Explanation of Drip Capital
Drip Capital provides credit access to small and medium-sized businesses, particularly those in emerging markets. The company started in India and now has locations in Mexico and the US, with plans to expand further. Drip Capital's invoice discounting platform allows SMB exporters to post transactions and get paid upfront, reducing their working capital cycle from 150 days to 60 days. The company also offers payables financing for importers through its buy now, pay later service. Drip Capital's founder was inspired to start the business to address the unmet credit needs of small businesses, particularly those doing business internationally. The company's primary markets are India, Mexico, and the US, with faster growth in other markets.
All About the Competitive Landscape in the Trade Finance Industry
Most SMEs don't get enough credit from banks because they lack hard collateral. Banks want the company to put up hard collateral like land, property, and machinery. Small business customers know Citibank and HSBC around the world. However, these banks focus more on the corporate segment, and their offerings are limited to the small business segment, which holds them back.
The second option may be more market-specific; other companies and fintech may offer working capital services or try to figure out how to meet similar working capital needs. However, most non-bank financial institutions (NBFCs) do not provide products made for export and import. The transactions or capital required for export-import is more extensive than what some SMBs or NBFCs may offer as their main product.
Many Indian small and medium-sized businesses (SMBs) would lend INR 10-15 lakhs ($12,000–$18,000. Even in the small business export-import sector, credit needs start at $50,000–$60,000 and go up to $1–2 million, so this segment is underserved.
Drip Capital's Growth and Capital Raise Progress. How
Drip Capital has raised over $525M in equity and debt funding through four funding rounds to build a trade financing platform and grow its business. The company works with large companies such as Barclays and EastWest Bank, and also attracts investment from family offices, wealth managers, and HNIs through its Notes program, which returns investors' money at a steady 6-8% rate. Drip has issued over $350 million in Notes since 2016 without losing principal or interest. The capital raise is timed to handle more users and no further funding plans are currently in place, with a focus on finishing tasks this year and potentially exploring funding options next year. The company states that it doesn't need funding to continue operations due to its strong financial position.
Transformation of Drip Capital Since Its Establishment in 2016
Four or five people were on our team in 2016. More than 300 people are currently working for us in three offices around the world. We made $1 million from originations in 2016. Each month, we make close to $150 million. We have customers in three countries but work with over 6,000 sellers and buyers in over 100 countries. When we first started, we focused on one trade route: Indian sellers selling to US buyers. Slowly, we now serve traders worldwide. We've grown in all ways in the last two years.
The Takeaway
Drip Capital, an Indian fintech startup, simplifies trade financing for SMBs in emerging markets. With its invoice discounting platform and payables financing product, it has raised over $525 million and grown its team to over 300 globally, generating millions in monthly originations. Check out the website of Trade Finance Advice to keep yourself updated on SMBs Drip Capital’s advancements.
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Smbs drip capital - Trade Finance Advice.pdf