Venture Capital Wanes, Alternative Investments Gain as Velocity Invests Over 600 Cr to Strengthen D2C and Ecommerce Firms

 Venture Capital Wanes, Alternative Investments Gain as Velocity Invests Over 600 Cr to Strengthen D2C and Ecommerce Firms

India's Bengaluru, Karnataka the Business Wire India

VC capital rose dramatically from 2019 to 2021, reaching a record high of 22.5 Billion USD, before precipitously dropping to USD 3.8 Billion in H1 CY23.

Although VC funding has slowed, D2C and eCommerce GMV in India are still increasing by 41% year over year.

With Velocity contributing INR 220 Cr. alone, alternative financiers came forward to close the gap and invested over INR 500 Cr. in the last six months.

The eCommerce sector is poised for a record-breaking year and a successful holiday season. Ecommerce grew by 41% in the July to September 2023 quarter compared to the same quarter in 2022 and by 25% quarter over quarter, according to Velocity's exclusive data collected from 3500+ enterprises.

With falling venture capital (VC) financing as a backdrop, D2C and ecommerce are growing quickly. Encouraged by the internet boom brought on by Covid-19, VC capital rose from 2019 to 2021 and peaked at H2 CY2021, setting a new record. Since then, it has had a significant loss of more than 80%, down to just USD 3.8 billion in the first half of 2023. 

Despite the benefits of venture capital funding, the lengthy decision-making process makes it time-consuming and stressful. Due to its restricted availability and equity-diluting approach, VC financing may not be the right solution for the D2C and ecommerce sector, which experiences major seasonal changes. Additionally, the process of obtaining money is frequently complicated by restrictive clauses and covenants. Along with a downturn in venture capital investments, all of these issues are pushing more entrepreneurs toward alternative funding options, which are regarded as being more transparent, quick, and flexible.

Alternative finance approaches, particularly revenue-based financing, have developed to fill the hole left by the decline of traditional funding sources. Notable firms in this space include Velocity, Klub, Recur, GetVantage, and others. These alternative lenders have invested more than INR 500 crore on ecommerce brand support over the past six months in order to get ready for the forthcoming holiday shopping season.

According to market predictions, this infusion of cash is going to fuel a rise in eCommerce growth. Notably, Velocity has contributed a sizeable INR 220 Crore over the past six months to this financial support, with the remaining funds coming from other important players in the alternative financing sector. With the flexibility and agility of alternative financing, D2C brands and ecommerce businesses have been able to survive and take advantage of these chances as they search for investments to buy bigger inventory levels and marketing expenditures for the upcoming holiday sales.

A more thorough examination of alternative finance reveals that more than 1000 brands have received funding in the past six months alone, with 600 of them coming through Velocity. The range of industries that Velocity has experience supporting includes garments and footwear, personal care and cosmetics, healthcare and dietary supplements, home and garden, consumer electronics, and food and beverages. Since its establishment, Velocity has invested more than INR 600 Cr over 1800+ projects, demonstrating its dedication to fostering growth for the neglected e-commerce industry.

The co-founder and CEO of Velocity, Abhiroop Medhekar, stated, "Our deal flow has grown at a staggering 3X year over year. We are committed to addressing this demand because ecommerce brands have a huge need for funding. We think that giving firms access to flexible, founder-friendly funding options would help them expand.

"As a founder, maintaining ownership and control was very important to me," said Mamta Roy, creator of Odette. We intended to avoid VC funding until it was absolutely necessary for our expansion because it dilutes equity. For entrepreneurs who wish to maintain control while growing their businesses without being under external pressure, revenue-based financing is a viable choice.

These alternative financiers are at the vanguard of this financial transformation, supporting the growth of the business as eCommerce continues its stratospheric climb. These financiers are in a strong position to continue advancing eCommerce success in the future thanks to their significant investment capacity and dedication to customers.

What Velocity Is

The largest revenue-based finance platform in India, Velocity, is committed to providing flexible and founder-friendly financing options for D2C and e-commerce firms. Brands can access up to INR 4 Crores of quick, non-dilutive growth capital through Velocity's main product, the RBF, to increase their marketing and working capital expenditures. Velocity is dedicated to providing comprehensive service to the rapidly expanding ecommerce industry and has launched a portfolio of tools for payments, reconciliation, and analytics. Abhiroop Medhekar, Atul Khichariya, and Saurav Swaroop founded Velocity in 2020. To date, Velocity has raised more than USD 30M in equity capital.

Visit https://www.velocity.in or send an email to hello@velocity.in for further details.

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