Nagpur: Trade finance firm Drip Capital, in association with FIEO, organized a seminar on the topic ‘Interactive sessions on Export Factoring: Easy access to unsecured finance for SME Exporters’ in Nagpur. Presented by Mr. Pushkar Mukewar, Co-founder, Drip Capital, the event saw the presence of Mr. Akshay Shah, Management Executive, FIEO (WR) as well as SME exporters from Nagpur.

 

SMEs account for 40% of India’s total export volumes but are some of the most underserved when it comes to working capital provisions. Demands for collateral, long processing times, heavy paperwork burden, and other such factors contribute towards making working capital highly inaccessible for SMEs. Institutions like factoring firms and NBFCs offer alternative financing solutions; however, many SME exporters are unaware of these offerings and need to be educated about the same. One of the easiest such alternative methods is invoice factoring.

 

At its most basic, invoice factoring is a process of procuring finance by selling the invoices of your transactions to a third party known as the factor. Based on your transaction history and other parameters, the factor gives the seller (the exporter) a credit line which they can then use to finance further transactions to other buyers (importers). In most cases, the seller gets 80% of their invoice value upfront from the factor (often without the need for collateral), and the remaining 20% — minus the factor’s fees and interest — after the buyer transfers the value of the invoice to the factor.

 

The third-largest city and the winter capital of Maharashtra, Nagpur is a major commercial center for the state’s Vidarbha region. A December 2018 report from global research firm Oxford Economics projected the city to be the fifth-fastest growing city in the world from 2019-2035, with an average growth of 8.41%. While Nagpur exports a variety of products, including various cereals, paper and paper articles, textiles, iron and steel, rubber, and plastics, it is most famous for the export of oranges. ‘Nagpuri Oranges’ are famous all over the world, and are exported to various countries, driving the city’s bustling trade sector – Nagpur exported goods worth US$597 million in 2018 alone (as of 30^th November, 2018).

 

Mr. Pushkar Mukewar, Co-founder, Drip Capital, was born and raised in Nagpur, studying at Bhavan’s B. P. Vidya Mandir. His father, Dr. Shrikant Mukewar, has been based in Nagpur for the last 30 years and practises there even today. Mr. Mukewar spent the early days of building Drip Capital in Nagpur, and thus has a strong affinity for the city’s SME and exporter community. He said at the event, “There are more than 900 small and medium industrial units in and around Nagpur. However, many of these SMEs face severe issues with managing their working capital because of a lack of adequate financing options. In order to solve this problem, Drip Capital provides collateral-free post-shipment finance to Indian exporters with instant approvals and minimal documentation.”

 

Drip Capital is a US-based trade finance firm that was founded in 2014 by Pushkar Mukewar and Neil Kothari to solve the financing problems faced by MSME exporters in India and abroad. Since its product launch in 2016, Drip Capital has seen rapid adoption by the Indian exporter community. The company has had exponential growth, growing over 20x times in terms of working capital financed in the last two years. The growth has been fuelled in part by an intense focus on technology and drive to productize trade finance by offering solutions customized to solve common issues and pain points faced by exporters.

 

Drip Capital has financed over $300 million worth of invoices till date, and currently works with over 300 exporters across various product categories and geographies across India and Mexico. Mr. Mukewar added, “A lot of Drip’s growth has been fueled by increasing demand from labor-intensive and SME-dominated sectors, such as agri-commodities, apparel, logistics, etc. These sectors are also represented strongly in Nagpur, and Drip is keen on helping the city’s exporters grow their business as much as possible.” As part of a partnership with FIEO, Drip Capital has undertaken a series of seminars aimed at educating exporters about the great potential offered by invoice factoring and other trade finance services. The Nagpur seminar was the latest in this series and served to reinforce the potential of the solutions provided to exporters by Drip Capital.

 

Drip Capital’s future plans include expanding into new markets across the world, and leveraging technology to solve multiple problems commonly faced by exporters. Moving beyond trade finance, Mr. Mukewar aims to continue leveraging data, technology, analytics, and a team of highly motivated professionals to make Drip Capital a leader in the global export ecosystem.