Affirm online lender raises $ 275 million

The online consumer lender environment is already quite crowded, but some big names on Wall Street and Sand Hill Road are

Max Levchin


Drawing:

Bloomberg News

when betting, there is room for another competitor.

Affirm, a fintech company founded in 2013 by former PayPal technical director Max Levchin, said on Wednesday it had raised $ 275 million in debt and equity from investment bank Jefferies, private equity firms -risk Andreessen Horowitz and Spark Capital, and others. The funds, most of which were debt, will be used to scale up Affirm’s lending efforts and reach new merchants. A spokesperson declined to comment on the value placed on the entire company in the cycle.

contrary to

Loan Club Corp.

or Social Finance Inc, larger competitors who specialize in personal debt and student loan refinancing, respectively, Affirm offers installment loans to consumers who buy, for example, a mattress from retailer Casper or furniture from FIG stores. .

“We are one of the very few, if not the only, lenders to make point-of-sale loans,” Levchin said in a telephone interview.

Yet the global online lending industry is teeming with competition. A frame at

Discover financial services

said on Tuesday he had counted as many as 200 entrants to the industry. Loan Club and

Capital on the bridge,

an online small business lender, reported this week that they spend large amounts of money on advertising to stand out from the crowd.

Mr. Levchin said Affirm doesn’t face the same marketing challenges because it relies on merchants to spread the word for them. “When the trader decides we’ve been helpful to them, they promote us very aggressively,” he said.

What also differentiates Affirm from other online lenders is that it currently keeps all of its loans on its own balance sheet instead of selling them to investors through an online marketplace, Mr. Levchin said. It examines clients who are currently excluded from traditional credit scoring models, such as recent U.S. citizens or Millennials who don’t have a long credit history.

“Affirm offers Millennials a unique and flexible financing alternative that is currently not available in the market,” said Brian McGrath, CEO of Jefferies, in a statement.

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