Max Levchin, one of PayPal's founders, has been working on revolutionizing credit with his startup Affirm and has now raised $275 million.
Levchin's business model is to make micro-loans at the point of sale, Fortune reporter Leena Rao told Press:Here.
"It's a new way of using credit," she told Scott McGrew.
Levchin's $275 million stems from debt and equity financing led by Spark Capital. From Rao's Fortune article:
“We price every loan to the transaction, the consumer, and the merchant,” Levchin says. “There’s no compounding interest, hidden fees, or debt calculators here. This is a simple, fixed-term loan, and the approval is in real time, so you know how much you’re borrowing, and what your payments will be each month, before you make your buying decision. We think of it as the future of honest finance.”
Rao said that the big capital investment is "a sign of the times with these massive funding rounds and massive valuations."
Nevertheless, Levchin's idea of micro-loans could disrupt commercial lending, especially since banks aren't particularly loved by millennials -- at least according to a Viacom research study.