Max Levchin, a longtime entrepreneur who previously served as co-founder and chief technology officer at PayPal, has raised $100 million for lending startup Affirm, which he co-founded in 2012.
Affirm gives consumers without a credit history or savings buying power. The startup offers financing for online purchases, such as a couch or guitar, which is paid back in monthly installments at an interest rate of zero to 30 percent.
According to the company, its core users include recent college graduates, immigrants and consumers without credit cards.
Affirm offers financing to shoppers during the checkout process at more than 700 online and brick-and-mortar stores, including mattress seller Casper Sleep Inc. and apparel company BCBG Max Azria Group LLC. The San Francisco startup said it plans to introduce a range of other services, such as loyalty rewards and financial management tools. Affirm hopes to encourage people to use its services daily.
The latest investment brings Affirm’s total financing to about $425 million, including debt. The new funds will go partly toward supporting partnerships with larger stores, particularly those with sales above $1 billion, the company said. In addition to this equity round, Affirm plans to raise more debt to help achieve its growth goals.
Investors have been pouring money into Levchin’s new brainchild in the hope that Affirm can do for debt what PayPal did for the digital wallet. On Wednesday, the company announced $100 million in new funding led by new investor Founders Fund, with existing investors Lightspeed Venture Partners, Spark Capital, Khosla Ventures, Andreessen Horowitz, and Jefferies participating. This brings Affirm’s total funding to $425 million.
It’s worth noting that Peter Thiel, the former CEO of PayPal and a former colleague of Levchin’s, is the founder of Founders Fund.
Affirm’s loan evaluation process pairs applicants’ credit scores with nontraditional data, such as social media profiles and online bill payment history. The company recently hired Len Eschweiler, a former executive at Avangate Inc. and Amazon.com Inc., as senior vice president of retail.