In a significant move to boost the B2B Software-as-a-Service (SaaS) sector, Velocity, a revenue-based financing platform, has announced the launch of an innovative Rs 300 crore growth fund. This strategic initiative aims to empower emerging SaaS businesses in India, offering them a unique opportunity to scale their operations, refine product development, and extend their market reach.
Fundamentals of the Growth FundThe fund is particularly structured to offer a fixed-term credit product, meticulously tailored to address the financing needs of SaaS businesses. It is designed to provide financing equivalent to 3 to 6 times a company’s monthly recurring revenue. This forward-thinking approach aligns the capital amount closely with the business’s revenue patterns, ensuring a symbiotic financial relationship. The repayment structure is conveniently spread over a 12-month period, making it an attractive option for SaaS companies.Addressing Unique Challenges in SaaSVelocity’s initiative comes at a crucial time for SaaS enterprises, which often face distinct challenges, particularly in the area of customer acquisition. SaaS businesses typically require significant investment in sales and marketing efforts to attract customers, with the breakeven point for such investments usually occurring within 6 to 18 months. This fund is designed to bridge this gap, providing flexible and understanding capital solutions.Velocity’s Expanding FootprintFounded in 2020 by Abhiroop Medhekar, Atul Khichariya, and Saurav Swaroop, Velocity has been a game-changer in the lending-tech space. In 2023, the company made a significant impact by disbursing over Rs 400 crore, exceeding its total disbursements of the past three years combined. Its focus on high-growth Direct to Consumer (D2C) brands and e-commerce businesses has been pivotal in its success. Notable brands in their portfolio include French Crown, Chumbak, IDC Kitchen, among others. With plans to double its e-commerce disbursements to Rs 800 crore and allocate an additional Rs 500 crore to new sectors, including B2B SaaS, in 2024, Velocity is poised for further growth.Empowering Growth Without Equity DilutionOne of the most significant aspects of this fund is that it allows selected companies to receive growth capital without needing to dilute their equity. This feature is particularly beneficial for startups and emerging businesses that wish to retain control while scaling their operations.Velocity’s growth fund represents a major step forward in supporting and nurturing the burgeoning SaaS sector in India. By providing tailored financial solutions, Velocity is not just offering a lifeline to these companies but also contributing to a more vibrant and dynamic tech ecosystem in the country.