PALO ALTO, California, May 14, 2020 /PRNewswire/ -- GoTrade, a trading arm of Drip Capital, Inc., today announced that it has sealed a deal worth US$4 million with a leading seafood importer based out of New Jersey.
Access to working capital has been a problem among SMBs for a while now. In most of the cases, importers must pay the suppliers once their shipment is cleared by the Food and Drug Administration (FDA). This process could take from a week to a couple of months, locking the working capital for the buyer for that period.
A client of Drip Capital explains that amidst limited working capital and reduction in number of fresh orders, GoTrade's credit line helped them in sourcing 50% more shipments during the peak season, thereby servicing their retail partners efficiently while beating competition, as well as getting rid of complicated and expensive letters of credit which their suppliers in Indonesia and Vietnam were insisting on.
There is significant demand for alternative financing options globally, especially among SMB-dependent economies. Drip Capital has been offering this inventory financing product to the importing community in the US for about a year now. Previously, the Palo Alto-based company has been providing post-shipment financing solutions to SMBs in emerging economies such as India and Mexico. So far, the company has issued credit worth US$800 million to over 400 exporters in these countries.
Talking about the development, Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital said, "The core value of the company is to innovate and solve the problem of the export-import community. Go-Trade is part of this effort where we are trying to solve the working capital issues among the buyers' community."
Go-Trade provides a line of credit that buyers/traders can avail by pledging their inventory to the company. From in-transit shipments to unsold inventory at any public warehouse, SMBs can sell their inventory to Drip to solve their working capital problems. In return, Drip will release 80% of the inventory value upfront. SMBs can buy back the inventory as and when they need to sell the commodity to other parties, in any quantity.
For example, say an SMB imports 40,000lbs of shrimp worth US$200,000 from India. The importer can sell his inventory to Drip Capital and get 80% of the payment, i.e., US$160,000 upfront. Drip will then store this inventory at a public warehousing facility till the SMB decides it wants to buy back the remaining inventory.
Explaining the solution further, Neil Kothari, Co-Founder and Co-CEO, Drip Capital said, "The SMB doesn't have to buy back the entire inventory in one go; instead, it could free up the inventory depending on the orders received. SMBs can avail a credit line of up to US$10 million with just one click and zero paperwork."
Drip Capital aims to sign up more such SMBs and help them unlock working capital by buying their inventory through this solution. "We have also built capabilities to fund in-transit cargo. This new product will allow us pay the supplier on behalf of the buyer before the cargo even reaches US shores," Kothari added.
Drip Capital also remains committed to working with existing and new customers in the US market despite the turmoil of the COVID-19 pandemic. Mukewar confirmed the company's stance, saying, "We have received a lot of queries about the impact of the COVID-19 pandemic on trade, and on our offering. The team at Drip Capital is confident that international trade of essential commodities like seafood and meat will continue despite the current situation. We are focusing our efforts on limiting disruptions to our clients and will continue to support them in every way we can to facilitate and assist with their working capital needs."
About Drip Capital:
Drip Capital Inc. is a global financial technology company, backed by Accel, Sequoia, Wing VC and Y-Combinator. It offers unique and innovative trade financing solutions to solve working capital problems among small and medium-sized traders in emerging markets like India and Mexico and developed markets like the US.
The financing solutions are collateral-free and offered through a completely digital process. To apply for Drip's offering, complete a quick online application with minimal paperwork. The company uses electronic data and an automated risk assessment platform, thereby ensuring a quick turnaround.
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SOURCE Drip Capital Inc.