Velocity, a fintech startup focussed on revenue-based financing for online businesses, has raised $20 million (around Rs 148 crore) in a Series A funding round led by Peter Thiel’s Valar Ventures, Abhiroop Medhekar, co-founder and CEO, Velocity, said in an interview to VCCircle earlier this week.
The round also witnessed participation from Presight Capital, iSeed, Maninder Gulati, global chief strategy officer of Oyo, Zac Prince, CEO of BlockFi and Philippe De Mota, partner at Hedosophia, a London-based venture capital (VC) fund focused on fintech investments.
Combined with the $10 million (around 75 crore) seed round announced earlier this year, Velocity has raised equity capital of $30 million (around 222 crore) till date. In addition, it has also secured multiple debt lines with the non-banking financial companies to scale its revenue-based financing platform, said Medhekar.
The company said it has over 1,500 direct-to-consumer (D2C) and ecommerce businesses signed up for their revenue-based financing product (RBF). Velocity has processed over 250 investments across 175 companies. The start-up aims to deploy over Rs 1,000 crore towards 1,000+ ecommerce businesses.
“We have built a strong foundation for the RBF product, and we want to use a good part of this capital to accelerate that growth. The priority right now is to double our focus on RBF, and aggressively grow in this segment. We want to use this capital to scale to over 1000 companies in our portfolio, and deploy over 1000 crores. Additionally, we have also launched our new product, Insights, which is three months old. We are also working on other product ideas which will broadly support the growing needs of the founders,” Madhekar told VCCircle.
Madhekar added that the company’s focus was mainly on online businesses that are primarily asset-light and data rich. Velocity leverages this digital data to evaluate an application across 50+ parameters and extend up to Rs 3 crore of financing within five days.
The repayments process happens flexibly as a share of the company’s online revenues. Velocity does not take any collateral, personal guarantee, or equity dilution, and charges a fixed fee of 4-8% on the deployed capital, it said in the statement.
The company claims brands that have raised capital through Velocity have experienced revenue growth of 1.5x within six months of funding, and 78% of these brands have become repeating customers of Velocity.
Earlier this year, N+1 Capital and LetsVenture jointly floated a $100 million fund to finance early-stage firms that are mostly bootstrapped.
In August, Klub raised $20 million (around Rs 148.6 crore) in a seed funding round led by 9Unicorns and Sequoia Capital India’s Surge, Alter Global and GMO Venture Partners.