Musely, a direct-to-consumer telemedicine platform, has secured over $360 million in non-dilutive capital from General Catalyst\u2019s Customer Value Fund (CVF).<\/p>\n
The company specializes in compounded treatments for skin, hair, and menopause care. Musely co-founder and CEO Jack Jia told TechCrunch that when CVF investors reached out to him last year, he wasn\u2019t looking to raise capital.<\/p>\n
That\u2019s because Musely, which was founded in 2014 as a wellness community before pivoting to prescription skincare in 2019, has been cash flow positive for years, he said. Jia didn\u2019t want to reduce his ownership in the company by selling off a chunk of it to VCs. They frequently approached him about a potential round and he consistently turned them down, he said.<\/p>\n
But unlike traditional venture capital, CVF wasn\u2019t looking to take an equity stake, nor was it offering a loan that would carry interest rate charges. Instead, CVF\u2019s alternative financing is similar to a tiny revenue-share agreement: Companies with predictable revenue streams borrow capital, and then repay the funds along with a fixed, capped percentage of revenue it generates from the use of General Catalyst\u2019s fund.<\/p>\n
Although Jia was initially skeptical, he quickly realized CVF\u2019s terms were more favorable than a standard bank loan and far less costly than a dilutive equity round.<\/p>\n
\u201cWhen I mathematically modeled it, I found this absolutely compelling,\u201d he said.<\/p>\n
While Musely has been growing its revenue on average 50% year-over-year and has served over 1.2 million patients, acquiring new customers for DTC brands like Musely can be very costly, Jia explained. \u201cWhen you become a billion-dollar revenue company, you need another billion in order to grow to the next billion,\u201d he said. \u201cThat\u2019s why most of the DTC companies, if you look at the capital burn, it is huge.\u201d<\/p>\n