Affirm Is Said to Be Raising Funding at $1.5 Billion Valuation
(Bloomberg) -- Affirm Inc., an online lender run by PayPal co-founder Max Levchin, is in advanced talks for a financing round that would earn it a place in the unicorn startup club.
The San Francisco-based startup is discussing an investment of about $150 million, said people familiar with the matter. The deal would value the company at $1.5 billion, about double the valuation from the last round in April 2016, said the people, who asked not to be identified because the terms aren’t finalized. Affirm declined to comment.
Levchin is a well-known name in the financial technology industry after starting PayPal with Elon Musk, Peter Thiel and others in 1998. Levchin helped create Affirm in 2012 to offer loans to online shoppers looking to make larger purchases. Today, Affirm works with more than 1,000 retailers, both online and in stores. It recently rolled out a mobile app that acts as a virtual credit card, advertising lower interest and late fees than a typical credit card.
Affirm is geared toward younger people who want a separate financing option for major transactions, like a computer or smartphone. The loans have fixed annual percentage rates that often range from 10 percent to 30 percent, depending in part on the borrower’s creditworthiness.
After last year’s investment led by Thiel’s Founders Fund, Affirm said it would focus on signing up larger stores, particularly those with annual sales above $1 billion. Late this summer, the Wall Street Journal reported that Affirm was in talks to start a pilot program with Wal-Mart Stores Inc.
The upcoming funding is expected to be led by a new investor, the people familiar with the matter said. The name couldn’t be learned. Current backers, including Founders Fund, Lightspeed Venture Partners, Khosla Ventures and Spark Capital, will also participate, the people said. The new round would bring the company’s funding total to more than $650 million, according to research firm CB Insights.
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