Velocity, a Bengaluru-based fintech startup, has secured $20 million in a Series A funding round from a US-based venture capital firm Peter Thiel’s Valar Ventures. The round also saw participation from Presight Capital, Maninder Gulati, Global Chief Strategy Officer of OYO, Zac Prince, CEO of BlockFi, Utsav Somani’s iSeed, and Philippe De Mota, Partner at Hedosophia.
Velocity has raised $30 million in equity capital to date. It has also obtained a handful of debt lines from top non-banking financial institutions in order to aggressively develop its revenue-based financing platform. The company seeks to invest Rs 1000 crores in Indian e-commerce businesses from freshly raised and existing cash.
According to the statement, Velocity works with more than 1,500 direct-to-consumer (D2C) and e-commerce firms in less than 1.5 years. The fintech startup has around Rs 1,200 crore in fundable revenues linked to its platform. It has already handled over 250 investments in 175 different firms.
Velocity, founded in 2020 by Atul Khichariya, Abhiroop Medhekar, and Saurav Swaroop, provides revenue-based financing for inventory and marketing spending to e-commerce firms. The startup is aiming to provide revenue-based financing as an alternative to debt financing and venture capital for e-commerce businesses.
Velocity analyzes over 50 factors in loan applications and offers loans up to Rs 3 crore. Businesses can make flexible repayments as a percentage of their online revenues. Velocity does not accept collateral, personal guarantees, or equity dilution and charges a flat fee ranging from four to eight percent.
Abhiroop Medhekar, Co-founder and CEO of Velocity, in a statement, said, “Our vision is to build the future of business financing in India. We are glad to partner with high-conviction investors like Valar since our early days. They have re-affirmed their belief in Velocity by doubling down and leading our Series A. We are already India’s largest revenue-based financier and keen to use this funding to build multiple world-class products for thousands of new-age businesses.”
Most of India’s rapidly growing D2C brands are featured in Velocity’s portfolio, including BellaVita, CrossBeats, Green Soul, PowerGummies, Smoor Chocolates, and WallMantra, to name a few. Whenever a company’s revenue fluctuates with the market, a revenue-based financing platform addresses the problem of paying fixed EMIs and diluting equity.
Velocity has a stake in the revenue growth of its portfolio firms because the repayments are tightly correlated to revenue growth. The company recently launched Velocity Insights, an analytics platform that helps firms gather actionable insights to optimize their sales and marketing performance. Insights have already lured over 300 D2C brands.
Velocity also provides preferred access to a tailored collection of e-commerce enablers, such as marketing agencies, logistics providers, as well as payment gateways, through its partnerships, which help handle every growth difficulty an e-commerce firm can experience.