The Bengaluru-based revenue finance player plans to use the funds to strengthen its customer base and expand its product portfolio to enterprise customers, the company said in a statement.
Revenue financing is a form of debt where the credit is underwritten based on future guaranteed income.
Velocity facilitates such loans up to Rs 2 crore ($280,000) without any collateral. Repayments usually happen as a fixed percentage of future revenues.
According to the company, “With Velocity, any business with digitally trackable revenues can just share access to their online data and get funded within a week.”
The seed round marks Valar Venture’s first investment in an Indian startup.
The VC firm was founded by Andrew McCormack, James Fitzgerald, and Peter Thiel, and is known to have invested in fintech companies such as Xero, Wise (formerly TransferWise), BlockFi, N26, Qonto, Stash, and others.
“As one of the fastest-growing economies in the world, India’s digital ecosystem is at an inflection point,” Fitzgerald, a founding partner at Valar Ventures, said.
“We have been impressed with Velocity’s strong customer orientation and aggressive plans to build innovative financing solutions,” he added.
Velocity has signed up 300 online businesses for its revenue-based financing and is presently focused on the online marketplace merchants and direct-to-consumer (D2C) businesses in India, the company added.
Velocity was founded in early 2020 by IIT-Bombay graduates Abhiroop Medhekar, Atul Khichariya, and Saurav Swaroop.
Medhekar, the CEO of Velocity, said “Incumbents fall short on the speed, efficiency, and flexibility expected by today’s entrepreneurs…We are thrilled to have Valar Ventures support our audacious vision of building the future of business financing in India.”
Other investors who participated in Velocity’s seed rounds include DST Global’s Mato Peric and Tom Stafford, Presight Capital, Utsav Somani’s iSeed, among others.