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Bengaluru-based fintech startup Velocity, founded by IIT Bombay graduates a year ago, and which provides collateral free loans to online businesses, has raised $10.3 million in seed funding led by Valar Ventures, a US-based VC firm backed by Peter Thiel.

The other investors who participated in this seed round include founding investors Mato Peric and Tom Stafford (DST Global) as well as Presight Capital, Utsav Somani’s iSeed, Oliver Jung (LAO Holdings), Robert Frohwein (Kabbage), Dhruv Arora (Syfe) and Erik Podzuweit & Florian Prucker (Scalable Capital).

Velocity will use the funding to ramp up its customer base and for further investment into creating financial instruments for the market.

Following this seed funding round, Velocity has also announced the launch of its digital marketing focused corporate credit card in partnership with SBM Bank and Visa.

The founders of Velocity are Abhiroop Medhekar, Atul Khichariya and Saurav Swaroop. They believe that the credit requirements of pure play online businesses, which are generally used for working capital and digital marketing, are still not met by banks or venture capitalists.

Velocity provides credit for online businesses based on the revenue flow of the companies. The repayment of the credit to Velocity is taken from the revenues generated by these online businesses with a certain fixed fee.

Abhiroop Medhekar, Co-founder and CEO, Velocity, said,

“We have the capability to understand the various data points of online businesses and extract the relevant financial information to feed into our credit model to provide the money.”

As of now, Velocity provides credit up to Rs 2 crore, and it takes about a week’s time to give this capital to the online businesses. The target segment of this startup currently is direct to consumer (D2C) businesses and online marketplaces.

Abhiroop believes significant number of founders use personal credit card for paying off their digital marketing expenses, which could lead to certain imbalances.

According to Velocity, over 300 online businesses have signed up for its revenue based financing option.

On the investment into Velocity, Valar Ventures Founding Partner, James Fitzgerald said, “As one of the fastest growing economies in the world, India’s digital ecosystem is at an inflection point. We have been impressed with Velocity’s strong customer orientation and aggressive plans to build innovative financing solutions.”