Musely, a telemedicine platform providing services directly to consumers, has secured over $360 million in non-dilutive funding from General Catalyst’s Customer Value Fund (CVF).

The business focuses on customized treatments for skin, hair, and menopause. Musely co-founder and CEO Jack Jia mentioned to TechCrunch that when CVF investors contacted him last year, he wasn’t seeking to raise funds.

This is due to Musely, which started in 2014 as a wellness platform before transitioning to prescription skincare in 2019, being cash flow positive for several years, he stated. Jia was reluctant to dilute his ownership by selling a part of the company to venture capitalists. He consistently declined their offers for potential funding rounds, he noted.

However, unlike conventional venture capital, CVF did not intend to obtain equity ownership, nor was it providing a loan with interest charges. Instead, CVF’s unique funding model resembles a small revenue-share agreement: businesses with stable revenue streams borrow funds and then repay the amount along with a capped, fixed percentage of the revenue generated from using General Catalyst’s funds.

Initially doubtful, Jia soon recognized CVF’s terms were more advantageous than a traditional bank loan and significantly less expensive than a dilutive equity round.

“When I calculated it mathematically, I found it incredibly attractive,” he stated.

Although Musely has been increasing its revenue by an average of 50% annually and has assisted over 1.2 million patients, Jia explained acquiring new customers for direct-to-consumer brands like Musely can be quite expensive. “Once you reach a billion-dollar revenue status, you require another billion to achieve the next billion,” he said. “This is why many DTC companies have massive capital burn.”

The investment from CVF addresses this challenge, equipping Musely with a financial reserve to enhance its customer acquisition efforts. This funding will facilitate sales, marketing, and other initiatives aimed at attracting new customers.

Musely is now part of a CVF portfolio that features Grammarly, Lemonade, and Ro. The fund has its own unique limited partners, and the resources it deploys were not included in General Catalyst’s recent $8 billion fundraising.

In contrast to many competitors, Musely has demonstrated remarkable capital efficiency. Following a $20 million raise from DCM and other investors in 2014, the company has not sought any additional equity capital since, according to Jia. Musely enables patients to access prescription products via asynchronous consultations with board-certified dermatologists and OB-GYNs.