Musely, a direct-to-consumer telemedicine platform, has secured more than $360 million in non-dilutive capital from General Catalyst’s Customer Value Fund (CVF), according to TechCrunch.
The funding allows the company, which specializes in compounded treatments for skin, hair, and menopause care, to expand its operations without selling off ownership stakes.
Musely co-founder and CEO Jack Jia told TechCrunch that he was not actively seeking capital when CVF investors approached him last year. Having been cash flow positive for several years, Jia had consistently turned down traditional venture capital offers to avoid reducing his ownership in the company.
Unlike standard venture capital deals, the arrangement with CVF does not require an equity stake or interest rate charges. Instead, the financing functions as a revenue-share agreement where the company repays the funds along with a fixed, capped percentage of the revenue generated from the capital.
Jia noted that he found the terms compelling after performing a mathematical model of the agreement. “When I mathematically modeled it, I can see this is absolutely compelling,” Jia said.
Scaling customer acquisition
Musely has grown its revenue by an average of 50% year-over-year and has treated over 1.2 million patients. However, the company intends to use the new capital to aggressively target customer acquisition.
Jia explained that the costs associated with maintaining growth for direct-to-consumer brands can be massive. He noted that as a company reaches a billion-dollar revenue milestone, it requires significant capital to reach the next level.
“When you become a billion-dollar revenue company, you need another billion in order to grow to the next billion,” Jia said, adding that capital burn is often huge for DTC companies.
