Velocity Raises $20 Million In Series A Funding

The funding was led by Peter Thiel's Valar Ventures, a US-based VC firm

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Velocity.in, a Bengaluru-based fintech startup, announced it 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 e-commerce businesses in India.

Velocity

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

Commenting on the successful closing of the funding round, Abhiroop Medhekar, co-founder and CEO of Velocity, said in the statement, “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 reaffirmed 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.”

The D2C segment in India is in a state of acceleration and is expected to grow at a CAGR of 25 per cent from $44.6 billion in FY21 to $100 billion by FY25. Increased internet penetration, widespread use of digital payments, and COVID-19 induced adoption of online buying resulted in 88 per cent order volume growth on D2C websites in 2020. However, despite this growth, capital remains out of reach for most businesses. Out of 75,000-plus independent e-commerce stores hosted on platforms like WooCommerce and Shopify in India, less than 0.5 per cent are equity funded - leaving a massive headroom for Velocity’s growth.

Andrew McCormack of Valar Ventures, said, “Since our last investment, Velocity has grown 10 times and secured the lead position in this fast-growing market. We were impressed by their strong customer orientation, tech-product DNA, and ambitious growth plans. We are excited to support their bold vision of empowering thousands of entrepreneurs in India.”

Brands that have historically raised capital through Velocity have grown their revenues by 1.5 times within six months of funding and 78 per cent of these brands become patrons of Velocity, added the statement.

Velocity’s portfolio includes many of India’s fastest growing D2C brands such as PowerGummies, Green Soul, WallMantra, BellaVita, Smoor Chocolatesand CrossBeats to name a few.