Musely, a direct-to-consumer telemedicine platform, has obtained over $360 million in non-dilutive capital from General Catalyst’s Customer Value Fund (CVF). The company focuses on compounded treatments for skin, hair, and menopause care. Musely co-founder and CEO Jack Jia told TechCrunch that when CVF investors approached him last year, he wasn’t seeking to raise capital.
Musely, established in 2014 as a wellness community before shifting to prescription skincare in 2019, has been cash flow positive for years, according to Jia. He was hesitant to reduce his ownership in the company by selling shares to VCs, who frequently approached him about a potential round, which he consistently declined.
CVF was different from traditional venture capital as it wasn’t looking to take an equity stake, nor was it offering a loan with interest charges. Instead, CVF’s financing resembles a tiny revenue-share agreement: companies with predictable revenue borrow capital and repay it along with a fixed, capped percentage of the revenue generated from the use of General Catalyst’s fund.
Jia was initially skeptical but soon realized CVF’s terms were more favorable than a standard bank loan and less costly than a dilutive equity round. “When I mathematically modeled it, I found this absolutely compelling,” he said.
Musely has been increasing its revenue by an average of 50% annually and has served over 1.2 million patients. Acquiring new customers for DTC brands like Musely is costly. “When you become a billion-dollar revenue company, you need another billion to grow to the next billion,” Jia explained. “That’s why the capital burn for most DTC companies is huge.”
The CVF funding helps resolve this issue, providing Musely with capital to support customer growth, including sales, marketing, and other acquisition efforts.
Musely joins a CVF portfolio with companies like Grammarly, Lemonade, and Ro. The fund has distinct limited partners, and its capital wasn’t included in General Catalyst’s last $8 billion fundraise.
Unlike many peers, Musely has been exceedingly capital-efficient. After raising $20 million from DCM and others in 2014, the company hasn’t raised any equity capital since, according to Jia. Musely enables patients to access prescription products through asynchronous consultations with board-certified dermatologists and OB-GYNs.