Affiniti Raises $17M Series A - SignalFire Leads Investment

Affiniti: Revolutionizing Expense Management for Small Businesses

Affiniti, founded by Aaron Bai, age 20, and Sahil Phadnis, 22, is developing expense-management solutions designed for small businesses, mirroring the sophisticated tools previously available only to tech startups.

Rapid Growth and Funding

The company’s impressive trajectory led to a $17 million Series A funding round, spearheaded by Signal Fire, just six months after securing an $11 million seed round, as reported to TechCrunch.

Core Offerings

Affiniti provides small and medium-sized businesses (SMBs) – including pharmacies, HVAC companies, and auto dealerships – with tailored expense-management credit cards and accompanying software.

Differentiating from Existing Solutions

While numerous credit card options are already available from established institutions like American Express and Capital One, as well as traditional banks, Affiniti aims to offer a distinct advantage.

The "V3" of Fintech

Bai describes Affiniti’s approach as “v3” fintech. He positions traditional banks and credit cards as “v1,” while companies like Brex and Ramp represent “v2,” characterized by enhanced user experience and improved financial data access.

“We believe v3 delivers a fintech product capable of providing actionable advice and insightful analytics to its users,” Bai explains. “Many traditional small businesses lack dedicated finance teams.”

Future Development

The Series A funding will facilitate the launch of new features, including banking services, bill pay functionality, cash flow analytics, and integrations with popular software like enterprise resource planning (ERP) and point-of-sale (POS) applications.

Current Features

Currently, Affiniti offers features such as customized cash-back rewards, native QuickBooks “qbo” files (rather than just CSV files), and short-term loans against invoices, with terms up to 90 days.

A Unique Path to Success

Notably, unlike many young founders, Affiniti’s origins aren’t rooted in a startup accelerator like Y Combinator. The founders attribute their success to their connection forged while attending UC Berkeley.

This provided them with a strong network within Silicon Valley, facilitating introductions to venture capitalists and other key players. They also independently developed a successful marketing strategy.

Strategic Partnerships

This strategy involved collaborating with industry-specific trade groups, such as those representing independent pharmacies, which helped validate their offering to potential customers.

These partnerships also unlocked access to benefits like group purchasing discounts. “We are deliberately focusing on specific niche verticals with intricate cash flow dynamics, rather than attempting to serve all SMBs,” Phadnis stated.

Impressive Growth Metrics

Within its first 14 months, Affiniti acquired 1,800 customers and processed approximately $20 million in monthly transactions, according to Phadnis.

The founders project that the platform will facilitate $1 billion in transactions by year-end.

Revenue Model

The startup primarily generates revenue through transaction interchange fees, supplemented by SaaS software sales and interest earned on short-term loans, resulting in substantial revenue growth.

Revenue Growth Details

While the founders did not disclose their current revenue, Phadnis indicated a tenfold increase over the past year. “Our revenue was at $1 million just 12 months ago, so a 10x growth is significant,” he remarked.

Investors

Additional investors in the Series A round include Codie Sanchez’s Contrarian Thinking Capital, Yahya Mokhtarzada (founder of TrueBill), and Austin Rief (founder of Morning Brew).

Seed investors Indicator Ventures, LightShed Ventures, and RiverPark Ventures also participated. Affiniti previously secured a $15 million debt facility, expandable to $50 million, alongside its initial seed funding.