Homegrown fintech startups Velocity and GetVantage, which provide revenue-based financing to startups, are raising funds to invest in software-as-a-service (SaaS) companies, the two firms said Wednesday.
The company said it has launched a Rs 300 crore growth capital fund that would invest in business-to-business (B2B) SaaS companies. Velocity said it would provide SaaS businesses with financing proportional to three to six times their monthly recurring revenue.
“SaaS enterprises encounter hurdles in their expansion, primarily with the costs associated with customer acquisition. These companies must allocate significant funds towards sales and marketing, with the break-even point for such investments typically falling between six and 18 months. For firms on a high growth trajectory, this results in negative cash flows due to ongoing investments,” said Abhiroop Medhekar, co-founder and chief executive officer, Velocity.
Selected companies will receive growth capital without the need to dilute their equity, thus allowing them to scale operations, accelerate product development, and expand their market reach.
“Velocity’s financing is designed to support these requirements, ensuring that SaaS enterprises have the necessary resources to market and scale with efficiency,” added Medhekar.
Founded by Medhekar, Atul Khichariya and Saurav Swaroop in 2020, Velocity offers fixed-term credit, revenue-based financing, revenue-based overdrafts, and credit lines. In 2023, the firm claims to have disbursed around Rs 400 crore.
The company’s client portfolio includes Soulflower, Chumbak, IDC Kitchen, Off Duty, Itsy Bitsy, Bear House, and Zlade.
In 2021, Velocity raised $20 million in a Series A funding round led by Peter Thiel’s Valar Ventures along with participation from Presight Capital, iSeed, Zac Prince of BlockFi, and Philippe De Mota, partner at Hedosophia, a London-based venture capital fund focused on fintech investments.
Mumbai-based GetVantage said it has launched its SaaS Accelerator Fund II for B2B SaaS companies. The new fund follows GetVantage’s SaaS Accelerator Fund I, which was a Rs 65-crore vehicle launched in 2022.
The latest fund has a total corpus of Rs 250 crore and will deploy the capital over the next 12-18 months, according to its statement. The company said it has fully deployed its maiden fund.
“We look to supporting more homegrown SaaS companies with recurring-revenue financing designed to help them scale without diluting equity, ownership, or control,” said Karun Arya, chief growth officer, GetVantage.
GetVantage has its own licensed NBFC called GetGrowth Capital and also has partnerships with Varanium’s Debt Fund, amongst other NBFCs and alternative investment funds.
Mumbai-based GetVantage Tech Pvt Ltd provides growth capital to digital brands without founders having to dilute equity. It raised $5 million in a seed round in 2020.
The company backed digital interactive community platform Life Quest Clubs in 2021 and direct-to-consumer brand Rage Coffee. A few days ago, the firm facilitated funding for the SaaS recruiting platform Incruiter.