San Francisco-Based Lending Startup Affirm Scales Dramatically

When Forbes Magazine released its annual list of their picks for the top fintech companies earlier this month, San Francisco-based lending startup Affirm was one of only four lending companies to make the cut. Affirm’s inclusion in Forbes’ Fintech 50 2019 list is a recognition of the company’s incredible growth over the past year. The alternative lender issued over $2 billion in loans in 2018, doubling their 2017 loan volume.

Led by PayPal co-founder Max Levchin, Affirm’s main product offering is point-of-sale loans. The alternative lender works with over 2,000 online merchants (including Expedia, Wayfair and Casper) to provide instant three to 24-month loans to finance purchases. Customers making larger purchases have the option of 36- and 39-month term loans. Annual interest rates (APRs) range between 10 and 30 percent depending on the customer’s credit history, though some online retailers such as Nest and Warby Parker subsidize 0 percent APRs for their customers. Notably, Affirm charges no late or prepayment fees.

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Looking forward, Affirm is planning to build on its growth through expansion in its footprint and its product offerings. Last October, the company announced that it would be opening a new office in Pittsburgh with plans to add 100 employees by the end of 2019 and 500 employees over the next five years.

At the same time, Affirm announced in January that it will be launching a pilot program to test out a high-interest savings account offering. The lending startup plans to work with a bank partner to offer its customers no-fee savings accounts. The initial product will provide two percent annual interest with no required minimum balance. Affirm aims to rollout the pilot savings accounts in the first quarter of 2019, assuming regulator approval.

In pursuit of expanding its lending services and potentially transitioning into a full-service bank, Affirm has raised $450 million in total capital over six funding rounds. Major investors include Khosla Ventures, Lightspeed Venture Partners and Founders Fund. Following the latest Series E round in December 2017 that raised an additional $200 million in capital, Affirm attained a valuation of $1.8 billion.