PayPal founder Levchin raises $275m for lending startup

PayPal founder Levchin raises $275m for lending startup

Affirm, a fintech startup led by Paypal co-founder Max Levchin that lets online merchants advance credit to consumers at the point of sale, has raised $275 million in debt and equity financing.

Spark Capital Growth led the funding and was joined by other new investors Jefferies and Andreessen Horowitz and existing investors Khosla Ventures and Lightspeed Venture Partners.

San Francisco-based Affirm is hoping to shake up financial services by offering people new ways to get affordable financing, particularly targeting millennials who are unhappy with banks and might have trouble getting funds from more traditional sources because of thin credit histories.

Rather than using normal credit scores, Affirm asks applicants for their name, mobile number, date of birth and the last four digits of their Social Security number before using its algorithms to trawl online data that can be used to make a lending decision.

The company's first product is a tool that does away with inflexible credit scoring and enables online shoppers to make a purchase and pay across multiple months with financing fees that promise to be a fraction of credit card interest rates.

Meanwhile, online merchants that integrate Affirm increase average order values and conversion rates by more than 20% and increases purchase sizes by 79-84%, claims a statement.

The new funding will be used to ramp up Affirm’s loan distribution capacity, grow its merchant services efforts, offer customers lower cost loans, and develop new products.

Says Levchin: "Today’s financial services industry is not well-equipped to handle the needs of the largest consumer generation in history. We’re building a financial technology company for the next generation, and for anyone who expects more from their financial service providers."

Comments: (3)

Jonathan Bowles
Jonathan Bowles - ImpactApp - Odiham 07 May, 2015, 07:13Be the first to give this comment the thumbs up 0 likes

Brilliant. Long overdue. I can use this in the UK on a billion £ market. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 May, 2015, 10:57Be the first to give this comment the thumbs up 0 likes

Bill Me Later blazed this trail successfully with a similar credit product and enjoyed a billion dollar exit by selling itself to Max Levchin's alma mater PayPal / eBay over 7-8 years ago. Millennials or otherwise, Affirm is on a strong wicket.

Jonathan Bowles
Jonathan Bowles - ImpactApp - Odiham 08 May, 2015, 11:43Be the first to give this comment the thumbs up 0 likes

Well noted. Thank you