Depends on the definition of "alt". The Mothers of Invention were not mainstream and started at about the same time as The Velvet Underground. Captain Beefheart's first single "Diddy Wha Diddy" predated the Velvets and came out in 1965 I think.
In terms of the punk aesthetic yes maybe the Velvets followed by The MC5, The Stooges, The Modern Lovers and New York Dolls, Ramones and the gates came crashing down after that.
Now as far as garage rock that's a huge area and the Sonics and Wailers ( from the west coast) were some of the early examples but even the Kinsmen's Louie Louie could be included.
As much as I love the Velvet Underground, I do not think they were the first Alt. Rock band. I'd say maybe the MC5 or The Sonics. It all depends on who you talk to.
Alternative rock is such a wide umbrella term I'm pretty sure you could find an earlier band to pick than the VU. The VU are one of the all-time biggest influences, though.
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