Max Levchin’s Affirm seeks capital amid surge in fintech funding

TechCrunch | Kate Clark | Sep 12, 2019

Affirmmax levchin - Max Levchin’s Affirm seeks capital amid surge in fintech funding, founded by PayPal’s Max Levchin, is said to be raising as much as $1.5 billion in a combination of debt and equity, according to people with knowledge of the company’s fundraising activities. Josh Kushner’s New York venture capital firm Thrive Capital is said to be leading the financing, with participation from the San Francisco outfit Spark Capital.

Affirm declined to comment. Representatives of Thrive and Spark, existing Affirm investors, have not responded to a request for comment.

Sources familiar with Affirm, which gives consumers an alternative to personal loans and credit by financing online purchases at point-of-sale, presume the round will be made up largely of a line of credit from a large financial institution, known as a warehouse facility.

Affirm recently raised a $300 million Thrive-led Series F round in April at a valuation of $3 billion. Fintech companies focused on payments and lending, however, require a vast amount of capital to sustain operations. Those capital requirements coupled with the frothiness of the venture capital market justify this additional cash infusion.

To date, Affirm has raised $1.03 billion in funding from Ribbit Capital, Founders Fund, Andreessen Horowitz, Khosla Ventures, Lightspeed Venture Partners and more, according to PitchBook. Fellow fintech ‘unicorns’ Brex, Stripe, SoFi and Kabbage, for context, have collectively raised roughly $5 billion in debt and equity to date.

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Affirm offers installment plans to online shoppers, a method of delayed payment historically reserved for large purchase like vehicles or luxury electronics. Using Affirm, consumers can create personalized installment plans for purchases as small as a pair of sneakers sold by StockX or as large as a diamond engagement ring from Diamond Nexus, for example.

Affirm, serving as an alternative to a credit card charge, requires no paperwork, minimum credit score or income. The company, however, makes money the same way as a credit card provider, with interest rates for Affirm’s loans falling between 10% and 30%.

Affirm’s fundraising efforts come as more and more companies are devoting ample resources to consumer and B2B lending. Affirm, doubling down on the opportunity in B2B, spun out a new financial services business focused entirely on business lending earlier this year. The company, Resolve, provides a “buy now, pay later” option tailored to B2B sales flow.

“Traditional B2B financing is slow, inaccurate and limits a business’s potential for growth because of an over reliance on email, call centers, faxes and manual invoicing processes,” Resolve wrote in an April press release. “Today, many companies offer a standard net 30-day payment plan only to their best and longest tenured customers, leaving others in need of financing to rely on credit cards or installment loans.”

Meanwhile, companies like Stripe and Square are making a concerted effort to explore other financial frontiers, with the former launching a lending tool as well as a corporate credit card this month. Square, for its part, recently introduced a new debit card, called the Square Card, allowing businesses to withdraw and spend money they’ve collected through Square payments.

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