Velocity, an India-based fintech startup, announced that it has raised $20 million in Series A funding led by Peter Thiel’s Valar Ventures, a United States based venture capital firm.

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

Combined with the $10 milion seed round announced earlier this year, Velocity’s total equity has been raised till date to $30 million. It has also secured multiple debt lines with leading non-banking financial companies (NBFCs) to rapidly scale its revenue-based financing platform.

Velocity said in a statement, armed with capital, the start-up has set its sights high and aims to deploy over Rs.1,000 Crores ($130 million) towards 1,000+ e-commerce businesses.

“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,” said Velocity Co-Founder and Chief Executive Officer Abhiroop Medhekar.

Meanwhile, Andrew McCormack from Valar Ventures said since his last investment, Velocity has grown 10 times 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. We are excited to support their bold vision of empowering thousands of entrepreneurs in India,” he added.

Velocity was launched in early 2020 by IIT Bombay graduates, Abhiroop Medhekar, Atul Khichariya, and Saurav Swaroop. The founding team has a strong background in India’s financial services and tech startup ecosystem. They previously worked in companies like Elevation Capital (earlier SAIF Partners), McKinsey, Acko Insurance, and HackerRank. Velocity is their second tryst with entrepreneurship. The trio had earlier worked together at Taskbob, a managed marketplace for high-quality home services.

Since the launch, Velocity has established revenue-based financing as a credible alternative to venture capital and traditional bank debt for e-commerce businesses in India.

Within a short span of 1.5 years, over 1500 direct to consumer (D2C) and e-commerce businesses have signed up for Velocity’s revenue-based financing. The fintech player has over Rs1,200 Crores ($161.6 million) of fundable revenues connected to its platform and has already processed 250+ investments across 175 companies.

It is noted that the D2C segment in India is in a state of acceleration and is expected to grow at a compound annual growth rate (CAGR) of 25 percent 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 percent order volume growth on D2C websites in 2020.

However, despite this growth, capital remains out of reach for most businesses. Out of 75,000+ independent e-commerce stores hosted on platforms like WooCommerce and Shopify in India, less than 0.5 percent are equity funded – leaving a massive headroom for Velocity’s growth.

Velocity also leverages the digital data to evaluate an application across 50+ parameters and extend up to Rs.3 Crore ($428,571) of financing within 5 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 percent to 8 percent on the deployed capital. Brands that have historically raised capital through Velocity have grown their revenues by 1.5 times within 6 months of funding and 78 percent of these brands become repeating customers of Velocity.

Velocity’s portfolio includes many of India’s fastest growing D2C brands such as PowerGummies, Green Soul, WallMantra, BellaVita, Smoor Chocolates and CrossBeats.

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 e-commerce enablers across marketing agencies, logistics providers, payment gateways etc., which help address every growth challenge an e-commerce brand could face.