PayPal founder Levchin raises $275m for lending startup
06 May 2015 | 8110 views | 3
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."