Musely secures $360M from General Catalyst without losing money

They had toA telemedicine platform aimed at consumers, has raised more than $360 million in non-dilutive funding from General Catalyst’s Customer Value Fund (CVF).

The company specializes in a variety of skin, hair, and anti-aging treatments. Musely co-founder and CEO Jack Jia told TechCrunch that when CVF investors approached him last year, they weren’t looking to raise money.

That’s because Musely, which was founded in 2014 as a health group before branching out into skincare products in 2019, has been thriving for years, he said. Jia did not want to reduce his ownership in the company by selling a small share to VCs. They often approach him about what to do and he always turns them down, she said.

But unlike traditional capital, CVF was not looking to earn interest, nor was it offering loans that would earn interest. In fact, some CVF funds are similar to a micro-funding agreement: Companies with a defined strategy borrow money, and pay back the money along with a fixed share of their earnings through the General Catalyst fund.

Although Jia was initially skeptical, he quickly realized that CVF’s terms were better than a fixed bank loan and cheaper than a dilutive equity round.

He said: “If I take the math, I found this to be very encouraging.”

Although Musely has been growing its revenue by nearly 50% year over year and has served more than 1.2 million patients, acquiring new DTC customers like Musely can be very expensive, Jia explained. “When you’re a multi-billion dollar company, you need another billion to grow the next billion,” he said. “That’s why most DTC companies, when you look at capital burn, are big.”

Funding from CVF solves this problem, providing Musely with a large war chest to support customer growth. These funds will support sales, marketing, and other customer acquisition efforts.

Musely joins CVF’s portfolio which includes By GrammarLemonade, and Ro. The fund retains its limited partners, and its investment funds are not included in the final General Catalyst. $8 billion in revenue.

Unlike many of his peers, Musely has been spending heavily. After raising $20 million from DCM and other investors in 2014, the company has not raised a single dollar of investment since then, according to Jia. Musely allows patients to access prescription medications by consulting with certified OB-GYN specialists.