PayPal co-founder Max Levchin is looking to reinvent the credit market with his lending startup Affirm, a financial technology company founded in 2013 that allows users to borrow money at the point of sale. The company focuses on younger buyers, which Levchin says no longer trust banks after the 2008 financial crisis.
“They saw the 2008 collapse at their formative years from the front row seat,” said Levchin. “Their parents sold their house short, they got repossessed, credit cards got pulled, rates got increased and they just don’t believe the bank has their best interests in mind.”
The San Francisco-based company lets borrowers buy now and pay later (three, six, or 12 month installment plans) for online purchases, with a 10 to 30% APR, based on the buyer’s creditworthiness. Recently, the company raised $275 million in fundraising and is expanding its target market to more than just millennials, according to Levchin.
But as for the tech space in general, Levchin said he sees a lot of froth.
“There are plenty of companies, for sure, that are not worth the price that they are fetching from private investors,” said Levchin. “They are riding the coattails of the really huge successes, like Uber. (Levchin is an investor in Uber) For them, there might be a correction, but that will just bolster the value of the ones that are worth it.”