Posted by Bangalore: Velocity, a cash flow-based financing platform today announced its ambitious Rs 300 crore growth capital fund dedicated to Indian B2B SaaS businesses. Velocity launched a Rs 300 crore growth capital fund to serve the financial needs of India’s B2B SaaS enterprises.
Indian SaaS industry is expected to reach around $26 billion in revenue by 2026, according to industry estimates. The fund is perfectly aligned with this growth, offering customised financial solutions to meet the dynamic requirements of modern businesses, the company said.
Credit and financing products
Velocity has partnerships with India’s leading NBFCs and regulated entities. It offers a fixed-term credit product, specifically designed to provide SaaS businesses with financing proportional to 3 to 6 times the amount of their monthly recurring revenue. It ensures the capital offered is directly correlated with the company’s revenue strength, providing a sustainable and balanced financial solution for growing businesses. Selected companies will receive growth capital without the need to dilute their equity, thus enabling them to scale operations, accelerate product development, and expand their market reach.
Distinctive hurdles
SaaS enterprises encounter distinctive hurdles in their expansion, mainly concerning the costs associated with customer acquisition, according to Abhiroop Medhekar, Founder and CEO of Velocity.
“These companies must allocate significant funds towards Sales and Marketing to attract customers, with the breakeven point for such investments typically falling between 6 to 18 months,” said Medhekar.
“Particularly for firms on a high growth trajectory, this results in negative cash flows due to ongoing investments. This period underscores the need for flexible and understanding capital solutions that can bridge this gap,” explained Medhekar.
“Our financing is designed to support these unique requirements, ensuring that SaaS enterprises have the necessary resources to innovate, market effectively, and scale with efficiency,” emphasized Medhekar.
Founded in 2020
Medhekar along with Atul Khichariya, and Saurav Swaroop founded Velocity in 2020. Since then the firm has expanded its financing suite which includes fixed-term credit, revenue-based financing, overdrafts and credit lines.
“Our focus revolves around deeply understanding the revenue dynamics of SaaS businesses and the goal is not just to finance businesses but to empower them to thrive in a competitive marketplace,” Medhekar explained about financing SaaS businesses.
“We are offering financing that is directly proportional to their monthly recurring revenue, thus aligning the capital amount closely with the business’s revenue. The repayment structure, spread over 12 months, is straightforward and suited to the unique financial rhythms of SaaS enterprises,” added Medhekar.
In 2024, Velocity plans to double its e-commerce disbursements to Rs 800 crore and allocate an additional Rs 500 crore to new sectors including B2B SaaS.
Last year, Velocity significantly outperformed its previous records, disbursing over Rs 400 crore – a sum greater than its total disbursements over the last three years combined with high-growth D2C brands and e-commerce businesses.
This milestone underscores the company’s robust growth trajectory and its commitment to diversifying financial solutions.
(Image source: Velocity)