Meet Rohit, the founder of an online D2C brand in India and the protagonist of our story. Back in 2016, he launched his online personal care brand. His brand saw steady growth and soon became a hot-seller on his Shopify store and e-commerce marketplaces.
Recently, he decided it was time to expand. But he would need additional capital to ramp up digital advertising. Also, he would need more inventory to serve more customers. So, he weighed his options and, like most entrepreneurs, decided it was a choice between equity and debt financing.
Rohit approached a number of venture capital (VC) firms but got rejected each time. For some, his business was too early while some others didn’t believe in its potential. One firm seemed impressed and keen to fund him. But there was a catch – they wanted a 30% stake in his business in exchange for their investment. Rohit, however, was not willing to dilute his business and sacrifice control. It would take multiple rounds of negotiation to bring them to friendlier terms – and there was no guarantee that it would happen. After losing 4 months with no positive outcome, he decided to let it go.
He then approached a bank for a loan. The first inconvenience was that he had to visit a physical bank branch. The second inconvenience was that the bank wanted some collateral or personal guarantee from him. It would take several bank visits, a mountain of paperwork, collateral verification, and altogether way too much time for anything to materialize. But the bank turned him down because his business did not have enough vintage.
Dejected, Rohit turned to the Internet for help. That’s when he learned about revenue-based financing by Velocity. They offered growth capital of up to Rs. 2 crore to internet-first businesses based on their online sales and revenue data. Founders could get funds up-front and repay flexibly as a share of future revenues. The cherry on the cake was that there was no equity dilution or collateral, just a small fee of 4-8% on the funds. Rohit decided to give it a try.
He filled a form on their website. They needed basic details like his business type, name, marketing return on ad spends (RoAS), and gross margins. He submitted the form and received an indicative offer of Rs. 1 crore within a minute. Talk about doing justice to one’s name.
Next, he had to give them access to his online marketing and sales accounts and a bunch of readily available documents (bank statement, GST, etc). Based on that, they finalized the offer and disbursed the funds within four days. Whoa! Rohit had just raised growth capital of Rs. 1 crore – within a week.
The question is, how was Velocity able to fund Rohit’s business so quickly?
- It had a positive RoAS of over 2.5x. Meaning for every 1 dollar of marketing spends, it generated over two and a half times revenue to cover marketing and other working costs.
- It had healthy gross margins of above 30%.
- The business needed working capital for digital marketing and inventory costs.
- It had trackable online revenues.
That’s it. It was all Velocity needed to fund him.
Is Rohit’s story a retelling of your life? Online businesses with fluctuating cashflows often do not find a great friend in traditional financing models. Velocity offers them a flexible, friendly, and superior alternative for raising non-dilutive capital – within just a week. If you want funds and you want them quick, revenue-based financing is the answer. Is it right for your business? Find out here.
Velocity provides revenue-based financing of up to Rs. 3 crore to online Indian businesses. We currently cater to direct-to-consumer (D2C) and e-commerce brands. To grow your business with us, apply now and get funded within 7 days.