PayPal Founders Team Up Again With $100 Million Round for Affirm

PayPal Inc. Co-Founder Peter Thiel Interview

Peter Thiel's venture firm Founders Fund led the investment in Affirm Inc.

Photographer: David Paul Morris/Bloomberg
  • Peter Thiel's Founders Fund led investment in lending startup
  • Affirm co-founder Max Levchin started PayPal with Thiel

Max Levchin’s online lending startup Affirm Inc. raised $100 million in a funding round led by Peter Thiel’s Founders Fund as the two PayPal co-founders team up again to take on the banking industry.

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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.

Startup funding has tightened over the last couple of quarters as venture capitalists back fewer companies. The number of venture deals last quarter was the lowest in about four years, said research firm PitchBook Data.

“In general, it is tougher to raise money out there right now,” said Levchin, Affirm’s chief executive officer. “We were very lucky to have built a business over the last few years that has shown all the necessary things to get to this level, and be able to raise money successfully.”

Like Levchin, Thiel has maintained an interest in financial technology since the two helped start PayPal in 1998. Thiel is an investor in Social Finance Inc., and his Founders Fund backs Stripe Inc.

“We’ve done a lot in various forms in fintech over the years,” Thiel said in an interview on Tuesday with Bloomberg TV’s Emily Chang. “We need to be doing more in many dimensions, including repairing the entire financial system from the ground up.”

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.

Founders Fund was joined in the funding round by previous investors, including Lightspeed Venture Partners, Khosla Ventures and Spark Capital.

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