Digital hospitality platform Velocity announced this week that, following its $16 million Series A last year, the company raised $22.5 million led by DIG Investments. The company creates curated dining experiences for time-poor diners looking to expand their horizons. The money will be invested in expansion to 29 cities over the next three years, with a heavy focus on the U.S.
“So many of the great problems have been solved,” pontificates Zia Yusuf, Velocity’s co-founder and CEO, but he points out that our generation is poverty-stricken for time. Fixing that problem in style is his company’s mission. “We want to help getting the most out of your city and your free time. Velocity takes care of the full experience, from booking to payment.”
In addition to DIG investments, the company was able to attract a star-studded roster of investors, including the founder of Starwood Hotels Group, Barry Sternlicht, and John Paul, one of the largest concierge companies in the world.
“This round of funding means we are now the best-funded startup in the premium dining space,” says Yusuf.Velocity has seen tremendous growth since its founding in 2014, with offices in London, New York, LA, Miami and San Francisco, and a world-wide staff of 59. The company’s growth plans will have it in 29 cities by 2020, mostly in the U.S.
“The U.S. is the biggest hospitality market in the world,” Yusuf says, pointing out that for its challenges, it helps being powered by a homogeneous language and a single currency. “It’s a very difficult and unforgiving market to crack. Having said that, the reward for getting it right is exponentially more valuable than creating a brand in any other market.”
The company’s business model is to charge the restaurants a per-head fee for delivering diners to the restaurants. In addition, Velocity takes care of the payment side of the dining experiences, with a small proportion of the money charged as its fees.
“The biggest challenge for us right now is to continue to innovate, making sure to stay true to our brand as we grow,” Yusuf told me, explaining that the company operates in an interesting market, where a lot of its competitors are “features masquerading as businesses,” without sustainable growth plans.
“We need to grow with unit economics that make sense, not at any possible cost,” says Yusuf. “We believe we are on a path to profitability with this fundraise.”