Alternative debt platforms are expected to expand their loan pool for digital native consumer companies as they gear up for a surge in sales in this festive season.
Debt platforms -- Velocity, GetVantage, and others -- are expected to write bigger cheque sizes to help these consumer companies manage inventory and fulfil faster deliveries.
Velocity, a cash flow-based financing platform, has earmarked ₹400 crore to support the financing needs of D2C and E-commerce brands in the upcoming festive season sales. This year’s allocation is over 60 per cent more than the ₹250 crore earmarked by Velocity in 2023.
“Velocity’s debt financing is specifically designed to empower D2C and E-commerce brands to scale their operations, optimize inventory, and implement effective marketing strategies. By providing the financial support they need, we’re excited to support the growth journey of several brands as they prepare to capitalize on the festive season demand and e-commerce growth,” said Abhiroop Medhekar, Co-Founder and CEO of Velocity.
Mumbai-based finance platform GetVantage expects to disburse up to ₹250 crore for e-commerce companies this year, almost 30 per cent more than last year, founder Bhavik Vasa said.
“Since 2020, we’ve supported hundreds of consumer businesses with access to crucial working capital during the festive season. In fact, year after year we’ve ramped up the corpus of capital we allocate towards this effort by more than 200 per cent,” he added.
Most consumers look for additional short-term financing, typically for four to six months. They are typically provided three debt instruments: revenue-based financing (RBF), fixed term financing and supply chain financing (Invoice Discounting).
“This short-term product is designed specifically to give e-commerce businesses the booster capital (up to ₹40 lakh) they need for the festive period with special conditions that include a significantly shorter tenor and longer moratorium,” said Vasa.
E-commerce companies expect sales to surge by 30-35 per cent this festive season, according to Balasubramanian A, Senior VP and Business Head at General staffing, TeamLease Services, due to the rise of quick commerce and consumer spending capacity.
The festive season generally starts on Independence Day on August 15 and lasts until New Year.
Alternative debt capital has been a popular financing option for many consumer companies because it offers a speedy way to get funding without reducing equity.
“We’re seeing more D2C brands in India turn to debt to ramp up inventory, manage cash flows, and push their marketing efforts without having to give up equity. As the festive season approaches and competition becomes even more intense in the D2C realm, debt financing can give brands that edge to meet customer expectations and win more. It’s about having the resources on hand to respond to market dynamics without waiting for traditional funding cycles. For D2C startups, especially, this flexibility has been increasingly proving useful,” said Chirag Taneja, Co Founder & CEO, GoKwik.