Velocity is a data-driven digital marketing platform that empowers marketers to target and convert consumers with hyper-personalized content. The company has raised $20 million in funding led by Valar Ventures, the venture capital fund founded by Peter Thiel. Velocity’s investors include Lightspeed Venture Partners, Matrix Partners, and other leading Silicon Valley firms.
According to Indian venture capital firm, Valar Ventures Principal Alex Moorthy, “We’ve been watching the growth of finance technology startups in Bengaluru and this is one such company that we believe will be a leader. There’s enormous value creation happening at Velocity and clearly there was significant traction from investors
Velocity is attempting to build a reliable alternative to venture capital and traditional bank debt for e-commerce and direct-to-consumer brands in India. Rather than charging an interest on the loans it sanctions, Velocity takes a low standard fee and businesses pay it back based on their revenue. Experian’s Merger Market said that Velocity has expanded rapidly in the past year, despite competitors raising funding. Schmidt commented “Revenue growth is significant and we are seeing double digit revenue growth on the customer side.” Most importantly, Schmidt thinks accounting irregularities might force government regulators to act sooner rather than later.
In July 2018, as part of the firm’s efforts to scale up operations and continue building a robust pipeline across various verticals it has been engaged in offering its products. The company claimed that through introduction of new services Velocity will help reduce queues for customers at over 940 branch offices and also offer instant funding to more customers.
Apart from the new capital, Velocity has also set milestones such as closing 2x revenue higher than its closest two competitors with a target of 10X growth rates by 2020. It’s aiming for 100 companies across various verticals and is already in final stage of negotiations
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% order volume growth on D2C websites in 2020. However, despite this growth, capital remains out of reach for most businesses. Out of over 75,000 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. Currently, it has a fully funded cash position of Rs 1,200 Crores ($213 Million) and will be able to consolidate cross-border deals.
Velocity’s new fund is led by the lead investors – Softbank Internet & Media Investment Fund (SIME Funds), GE , the Boston Consulting Group, Matrix Partners-India Corporate Venture Capital Fund, Sunil Patni of SAIF Partners and others. Aditya Grover, the co-founder of Newton Investment Advisors stated “Velocity is an early stage technology company with a product that enhances speed for both online and mobile transactions. Velocity Ventures aims to capitalise on this opportunity by investing in not just one but three VC funds across startups that use Artificial Intelligence, Big Data and Machine Learning. Velocity is now the first private equity investor into India to focus solely on artificial intelligence companies.”