Affirm, Max Levchin's consumer lending startup, raises $100 million

SAN FRANCISCO (Reuters) - Serial Silicon Valley entrepreneur Max Levchin has raised $100 million for his consumer lending startup Affirm, bucking the trend of falling valuations and slowing growth confronting other financial technology companies.

The funding round, which puts Affirm’s total financing at about $425 million, came from a longtime friend of Levchin’s - Peter Thiel, who co-founded payments company PayPal with Levchin. Thiel’s venture firm Founders Fund led the round.

Levchin started Affirm in 2013 to give 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.

Affirm says its users include recent college students, immigrants and consumers who don’t use credit cards.

The funding boosts Affirm’s valuation from $576 million to about $800 million, according to venture capital database PitchBook. The round was purely equity, to help the company add services and build out its technology, rather than debt.

Levchin said he was lamenting to Thiel one evening over dinner that he hadn’t raised money last year, when VCs were investing more freely. So Thiel, who has known Levchin for about two decades, offered to write the check.

“It sort of seemed like the perfect match,” Levchin said.

Existing investors including Lightspeed Venture Partners, Khosla Ventures and Andreessen Horowitz joined the round.

For Levchin, Affirm is something of a PayPal 2.0, using big data analytics and highly complex security systems to offer consumers an alternative to traditional banks. Affirm this year plans to roll out additional financial services and will add a number of big-box retail stores to the list of 700 or so merchants that accept Affirm for payment.

Levchin declined to offer details on company revenue.

Affirm’s financing comes as online lenders and other “fintech” startups face increasing scrutiny. Prosper Marketplace, an online lending marketplace, delayed plans for an initial public offer that was expected last year and has struggled with loans going sour faster than expected.

Lending Club Corp LC.N and OnDeck Capital ONDK.N, the first online lending companies to go public, are both trading under water. Lending Club's share price has fallen more than 49 percent from its IPO price of $15, and OnDeck is down nearly 65 percent from its $20 IPO price.

“The market has definitely been not very kind to publicly traded equities,” Levchin said.

Reporting by Heather Somerville; Editing by Leslie Adler