[Funding alert] Fintech startup Velocity raises $20M in Series A round led by Peter Thiel’s Valar Ventures

Velocity, a Bengaluru-based fintech startup, has raised $20 million in Series A funding led by Peter Thiel’s Valar Ventures, a US-based VC firm. Launched in early 2020, Velocity has established revenue-based financing as a credible alternative to venture capital and traditional bank debt for ecommerce businesses in India.

Within a short span of 1.5 years, over 1,500 D2C and ecommerce businesses have signed up for Velocity’s revenue-based financing. The fintech player has over Rs 1,200 crore of fundable revenues connected to its platform and has already processed 250+ investments across 175 companies. Armed with capital, the startup has set its sights high and aims to deploy over Rs 1,000 crore towards 1,000+ ecommerce businesses.

Abhiroop Medhekar, Co-founder and CEO of Velocity, 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.”

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Andrew McCormack of Valar Ventures added,

“Since our last investment, Velocity has grown 10X and secured the lead position in this fast-growing market. Despite this exponential growth, their portfolio quality remains strong. We were impressed by their strong customer orientation, tech-product DNA, and ambitious growth plans.”

Online businesses, while asset-light, are data-rich. Velocity said it 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 happen flexibly as a share of the company’s online revenues. Velocity does not take any collateral, personal guarantee, or equity dilution and only charges a fixed fee of 4-8 percent on the deployed capital. Brands that have historically raised capital through Velocity claim to have grown their revenues by 1.5x within six months of funding and 78 percent of these brands become repeat customers of Velocity.

Velocity’s portfolio includes many of India’s fastest growing D2C brands such as Power Gummies, Green Soul Ergonomics, WallMantra, Bella Vita Organics, SMOOR, and Crossbeats, to name a few. 

As the repayments are directly linked to a company’s revenues, Velocity has a skin in the game to support the revenue growth of its portfolio companies. To facilitate this, Velocity recently launched Velocity Insights - an analytics tool kit that helps businesses gain actionable insights to improve their sales and marketing performance. 300+ D2C brands have already signed up for Insights.

Additionally, through its partnerships, Velocity unlocks preferred access to a curated set of ecommerce enablers across marketing agencies, logistics providers, payment gateways etc., which help address every growth challenge an e-commerce brand could face.

Other investors who participated in Velocity’s Series A include Presight Capital, Utsav Somani’s iSeed, Maninder Gulati (Oyo), Zac Prince (BlockFi), and Philippe De Mota (Hedosophia).

Combined with the $10 million seed round announced earlier this year, this brings Velocity’s total equity raised till date to $30 million. In addition, Velocity has also secured multiple debt lines with NBFCs to rapidly scale its revenue-based financing platform.