Bengaluru based fintech startup, Velocity, has raised a total of $10.3 million in seed funding led by Valar Ventures, a US-based VC firm backed by Peter Thiel. This marks Valar Venture’s first investment in an Indian startup.
The funds will be utilized by Velocity for ramping up its customer base and for building financing products for the businesses of tomorrow.
Velocity facilitates revenue-based financing up to Rs 2 crore ($280K) with zero equity dilution or personal guarantees.
Revenue-based financing is a new, more flexible alternative to venture capital or bank debt, wherein repayments happen as a fixed percentage of future revenues. The venture claims that with Velocity, any business with digitally trackable revenues can just share access to their online data and get funded within a week.
Velocity currently focuses on the fast-growing segment of online marketplace merchants and direct-to-consumer businesses in India. This segment is booming as the shift from offline to online retail got accelerated post COVID. Over 300 online businesses have signed up for Velocity’s revenue-based financing.
Launched in early 2020 by IIT Bombay graduates, Abhiroop Medhekar, Atul Khichariya and Saurav Swaroop, Velocity already funds crores of marketing and inventory spends for its customers every month, with no collection delays or stress in its portfolio so far.
With this funding, Velocity also announced the launch of its digital marketing focused Visa corporate credit cards in partnership with SBM Bank. Online businesses spend up to 30 percent of their revenues on digital marketing but primarily end up using a personal credit card for this. Velocity aims to provide a corporate credit card for the digital marketing use case, which allows online businesses to “put their marketing on autopilot”.
Talking about Velocity and the India opportunity, James Fitzgerald, a founding partner at Valar Ventures, said, “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.”
“Having been a VC 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 CEO at Velocity.
Other investors who participated in Velocity’s seed rounds include founding investors Mato Peric and Tom Stafford (DST Global) as well as Presight Capital, Utsav Somani’s iSeed, Oliver Jung (LAO Holdings), Robert Frohwein (Kabbage), Dhruv Arora (Syfe) and Erik Podzuweit & Florian Prucker (Scalable Capital).
Valar Ventures is a venture capital fund based in the United States, founded by Andrew McCormack, James Fitzgerald and Peter Thiel. The firm is known for investing in fast-growing fintech companies that are pursuing huge market opportunities, such as Xero, Wise (formerly TransferWise), BlockFi, N26, Qonto, Stash and others.