Fintech startup, Velocity, on Wednesday said it has raised a total of $10.3 million as a part of its seed funding led by US-based Valar Ventures, backed by PayPal co-founder Peter Thiel.
This marks Valar Venture’s first investment in an Indian startup.
According to the Bengaluru-based startup, the funds will be utilised for ramping up its customer base, as well as building on its products.
A year old, Velocity provides revenue-based financing up to ₹2 crore (or $280,000) with zero equity dilution or personal guarantees. Revenue-based financing is a new alternative to venture capital or bank debt, wherein repayments happen as a fixed percentage of future revenues.
Velocity is currently focused on the fast-growing segment of online marketplace merchants and direct-to-consumer (D2C) businesses in India, for its revenue financing product.
It also claims that over 300 online businesses have already signed up for Velocity’s revenue-based financing.
“Having been a venture capitalist and a founder myself, I strongly felt the need to reimagine financing products for new age businesses. Incumbents fall short on the speed, efficiency and flexibility expected by today’s entrepreneurs. We want to change that. We are thrilled to have Valar Ventures support our audacious vision of building the future of business financing in India.” said Abhiroop Medhekar, co-founder and chief executive officer at Velocity.
Along with the funding, Velocity also announced the launch of its digital marketing focused Visa corporate credit cards in partnership with SBM Bank, to provide for the digital marketing spends use case.
“As one of the fastest growing economies in the world, India’s digital ecosystem is at an inflection point. We have been impressed with Velocity’s strong customer orientation and aggressive plans to build innovative financing solutions. We believe the Velocity team will empower thousands of entrepreneurs in India and we are excited to be partners with them in that,” said James Fitzgerald, founding partner at Valar Ventures.
In India, Velocity also competes with the likes of other revenue-based financing platforms including GetVantage, which recently raised $5 million, in October, last year, through equity and debt, as a part of its seed round of funding led by Chiratae Ventures (formerly IDG Ventures).
With ticket-sizes of financing ranging from ₹20 lakhs to ₹2 crores, GetVantage is also focussed on e-commerce and DTC brands, apart from domains including edtech, B2B software-as-a-service (SaaS), subscription-based services, personal and home care, as well as health foods, and fashion.
