Financing platform Velocity announces Rs 300 crore fund for B2B SaaS startups Revenue-based financing platform Velocity on Wednesday announced a Rs 300 crore (around $36 million) fund to provide growth capital to B2B (business-to-business) software-as-a-service (SaaS) startups. According to Velocity, the new fundaligns with the growth in the Indian SaaS market’s revenue to around $26 billion by 2026. The fund will invest in the form of a fixed-term credit product with financing proportional to three tosixtimes the amount of companies’ monthly recurring revenue without any equity dilution. Abhiroop Medhekar, Founder and CEO of Velocity said SaaS enterprises encounter distinctive hurdles in their expansion, mainly concerning the costs associated with customer acquisition. Such enterprises have to allocate significant funds towards sales and marketing to attract customers, with the breakeven point for such investments typically falling between 6 to 18 months. Particularly for firms on a high growth trajectory, this results in negative cash flows due to ongoing investments, he said. Velocity’s new fund will look to address the need for flexible and understanding capital solutions to bridge this gap, according to Medhekar. Founded in 2020, Velocity offers fixed-term credit, revenue-based financing, revenue-based overdrafts, and credit lines. In 2023, the company disbursed over Rs 400 crore which was greater than its total disbursements over the last three years combined to D2C brands and e-commerce businesses. Bengaluru-based Velocity works with over 4,000 brands and has disbursed over Rs 700 crore with French Crown, Soulflower, Chumbak, Off Duty, Itsy Bitsy, Bear House, and more in its portfolio. It has raised $30 million in funding so far led by Peter Thiel’s Valar Ventures. As per estimates from management consulting firm McKinsey, the Indian SaaSmarketis expected to be worth $50-70 billion by 2030, up from $7 billion in 2022. However, India would still beunder 5 per cent of the global SaaS market, which is likely to grow from $450 billion to $1.3-$1.6 trillion during the same period.
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.