Affirm joins unicorn club after $200 million round
BI Intelligence
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US-based online point-of-sale (POS) financing provider Affirm has raised $200 million in a Series E round led by GIC, Singapore's sovereign wealth fund, with existing backers Spark Capital and Khosla Ventures also participating.
The round has earned the company a private valuation of between $1.5 billion and $2 billion, making it the latest fintech to join the unicorn club. Affirm was last valued at $800 million, following another mammoth round of $100 million in May 2016.
Significantly, the funding will go in part toward international expansion. Although Affirm will use the $200 million for multiple purposes including opening a New York office and hiring more staff, CEO Max Levchin said that some of the money will go toward international expansion. Levchin didn't specify which overseas markets Affirm is looking at, but GIC leading its latest round suggests Asia will be a target.
Affirm has likely begun looking beyond the US amid indications that younger consumers — who make up most of Affirm's user base — are taking out fewer loans. Additionally, while US consumer credit as whole is rising, which could seem beneficial for POS lenders, it likely indicates that consumers increasingly cash-strapped, impacting their ability to repay loans and making them a less attractive target market.
International expansion is never easy, but the odds seem to be in Affirm's favor. Even the largest and most resourceful alt lenders often struggle to launch smoothly in new markets, due to a lack of understanding of local regulatory intricacies, financial systems, and cultural differences, as well as a failure to tweak their business models appropriately.
However, if Affirm is indeed planning Asia as its next frontier, it will surely benefit from the support of a domestic backer like GIC, by being able to leverage its knowledge of local markets, its extensive network of influential figures, and its undoubtedly thorough familiarity with regional regulations.
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