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Max Levchin’s Affirm Seeks Capital Amid Rising FinTech Funding – TechCrunch

By on March 11, 2021 0

Another consumer finance firm is lining up investors for its biggest cash injection to date.

To affirm, founded by PayPal’s Max Levchin, would raise up to $ 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-based venture capital firm Thrive Capital would lead the funding, with participation from San Francisco-based Spark Capital.

Affirm declined to comment. Representatives for Thrive and Spark, existing Affirm investors, did not respond to a request for comment.

Sources familiar with Affirm, which offers consumers an alternative to personal loans and credit by funding online point-of-sale purchases, assume the round will largely consist of a line of credit from a major financial institution. , known as the warehouse. .

Affirm recently raised a $ 300 million Series F led by Thrive round in April at a valuation of $ 3 billion. Fintech companies focused on payments and loans, however, require a large amount of capital to support their operations. These capital requirements added to the scum of the venture capital market justify this additional injection of liquidity.

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. The other fintech ‘unicorns’ Brex, Stripe, SoFi and Kabbage, for context, have collectively raised around $ 5 billion in debt and equity to date.

Affirm offers installment plans to online shoppers, a deferred payment method historically reserved for large purchases 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 credit card fees, requires no paperwork, no credit score or minimum income. The business, however, makes money in the same way a credit card provider does, with interest rates for Affirm loans ranging from 10% and 30%.

Affirm’s fundraising efforts come as more companies dedicate vast resources to consumer and B2B lending. Affirm, doubling the opportunity to B2B, created a new financial services company entirely focused on business lending earlier this year. The company, Solve, offers a “buy now, pay later” option adapted to the B2B sales flow.

“Traditional B2B funding is slow, inaccurate, and limits a business’s growth potential due to over-reliance on email, call centers, faxes, and manual billing processes.” , Resolve wrote in an April article. Press release. “Today, many companies offer a standard 30-day net payment plan only to their best and oldest 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 loan tool as well as a business credit card this month. Square, for its part, recently introduced a new debit card, called the Square card, allowing businesses to withdraw and spend the money they’ve collected through Square payments.

Venture capital investments in U.S.-based fintech companies are expected to reach new highs this year. In the first eight months of 2019, $ 10.5 billion was injected into the industry, following a record $ 11.6 billion in 2018. Globally, investments in FinTech are also increasing, with nearly $ 20 billion deployed this year, by PitchBook.

Competition in the fintech space has accelerated growth and innovation as user-friendly and frictionless tools permeate the conservative and highly regulated financial sector.

Next to a year of the fintech mega-towers, we expect a series of initial fintech public offerings as early as next year. Affirm, Robinhood, Stripe, SoFi, Coinbase, we’re watching you.

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