According to Apptopia, Klarna dominates in global downloads and MAUs, though Affirm enjoys leading engagement. Favorite takeaway: Well-designed with an easy-to-understand flow. Affirm evaluates loan eligibility and the associated interest rate on a per-transaction level and based on merchant negotiations. Each morning, she would load produce and foodstuffs into a lead-lined container and observe its readouts. Now, case study examples from B2B powerhouses like HubSpot, Airtable, Mailchimp, and Gusto are just a click away. Maksymilian. Fulfilling its potential will require a change in consumer behavior. The deck showed that the startup had over 20,000 unique visitors, 18,000 monthly alerts, 12 minutes average sessions on the site. > 0% APR merchant. So far, Affirm's credit model has held up well. Affirm disburses the purchase amount and an origination fee to its banking partner. Interestingly, Afterpay, an Australian company, appears to be outpacing Affirm's domestic growth. Peloton comprises 28% of Affirm's overall revenue in FY 2020. Martincevic brings years of experience as the former COO of Groupon, where she managed a $1.2 billion P&L. Cost of capital and equity requirements will decline with scale, and invested funds will be recycled more often as Affirm introduces new high-frequency products. After Paypal sold to eBay for $1.5 billion, Levchin founded HVF (Hard Valuable Fun), a startup studio that produced Levchin's second startup Slide.com, among others. Social proof almost always work. There are two flywheels that Affirm describes in its S-1: a consumer-merchant flywheel and a credit modeling flywheel. As of today, BuzzFeed has managed to raise over $240 million. Historically, Affirm has devoted little capital to winning over consumers, with just ~4% of revenue spent on Sales & Marketing (S&M). It is good to buy beyond our means, to acquire the computer we cannot afford. If you can’t do that, it’s time to put some time into nailing it down. Foursquare is a mobile platform that helps you find the best places to go in your area. The company raised over $400,000 using Angel List. Taking these in turn: Affirm's largest revenue source is the network fees it charges its merchants. To date, Kai Xin and her company (HighSpark) have helped to develop +500 powerful narratives. Fighting off those giants may scare off some investors, but Affirm will point to the market's size, the room for multiple winners, and the new product opportunities. The best takeaway is the working partnership with large brands that this platform already has. If a loan is sold, Affirm records a gain or loss on the loan sale and charges an ongoing servicing fee to the new loan owner. But beyond the fundamentals of the business, Affirm's long-term success may depend on its ability to further cement that ethos, stoke our desires, narrow the distance between impulse and purchase. PayPal is a colossus in its own right before even considering competition from its Venmo arm. 800 users, $150,000 annual revenue run rate, etc.). Ultimately, there is no question that BNPL has a market. You can go straight to them by clicking here. We use application and transaction data to train our model, including data from more than 7.5 million loans and six years of repayments. If you’ve never done it before and you’re a first-time entrepreneur, it can be incredibly daunting. Saving. However, this is a function of the mix. Silvija Martincevic serves as Chief Commercial Officer. Taking a step back from Peloton for the moment, Affirm is good for purchases that are: 1) large, 2) durable goods, and 3) made online. From Affirm's 'For Business' page: Affirm's friction-free borrowing and borrower-friendly terms reduce the barriers to purchasing expensive items, increasing AOV, and repeat purchase rates. Many of the early team members, now known as the Paypal Mafia, would go on to found successful ventures of their own, including Yelp, YouTube, LinkedIn, and Space X. It doesn’t hurt to start a pitch with big numbers the company has, like the millions of users visiting the website on a monthly basis and quotations from large organizations such as CNN. With the platform having facilitated 8.5 million transactions over the period, marketing costs amount to $5 per transaction, a meager acquisition cost—unsurprising given the work the merchant puts in. Remembering it years later, Levchin would describe it as an unusually lambent moment. In the past year, Affirm processed just over 8.5 million transactions at an average ticket size of $615 per transaction. The consumer purchases the product with a one-time virtual card. In the last 12 months, it earned contribution profit equivalent to 4.5% of GMV. And unlike other lending products, Levchin wouldn't come and repossess your Peloton bike if you stopped paying (though he can report you to the credit bureaus). In the last 12 months, these fees amounted to 6.0% of GMV. That's historically been a barrier to e-commerce penetration for luxury goods. This will, in turn, improve unit economics. In the meantime, Affirm's securitization trust ($400 million loan pool) does not include any loans to consumers in Iowa or West Virginia, where risk is higher. The company doesn't seem to collect more data than credit card companies or its competitors. Notably, Affirm is absent from the analysis, perhaps because of its focus on higher-ticket items and the decision to charge consumers interest. On the consumer side, the relative wallet share of purchases suitable for Affirm is growing, even as overall consumer spending declines. Affirm has built a product that is valuable to both merchants and consumers. You can click the links below to go straight to them: These pitch decks were created by top brands in tech. The board seems to recognize Levchin's importance, structuring his compensation to incentivize a long tenure as CEO. My favorite part is the transformation of industry, which is laid out on a table format. In the US, Affirm's core market, retail sales totaled $6.2 trillion in 2019. A customer who is in the process of buying a Peloton bike, for example, will be offered the option to finance the purchase for as little as 0% APR, alongside other payment options. They raised $9 million with these decks. This deck has the basic principles like a great introduction, an outline of problems, potential solutions, market opportunities, products, case studies, milestones, traction, and a future plan. The startups they worked with raised cumulatively over $80 million in funding. Merchants use Affirm because it improves pricing power, repeat purchase rates, and conversion rates. According to the St. Louis Fed, overall credit card delinquency rates have oscillated between 2.0% and 2.7% over the past five years. While the company strips this out of its contribution profit, it effectively inflates reported revenues. Loans that are sold trigger a gain or loss that shows up as a revenue item on Affirm's income statement. To help you, we’ve taken cues from top startups who’ve raised money from angel investors and VCs with effective pitch decks. The following quarter it was able to release some of this allowance, bringing the amount down to 8.8%. They tell you straight away. A physicist by training, Elvina spent her days at the Institute of Food Science's radiology lab. In the financial year to June 2020, Affirm sold 56% of the loans it bought. Their deck starts out with a clear message, which was that “owning more devices doesn’t make your life easier”. She has the domain expertise to navigate the regulatory environment for Affirm as it adds financial products to the platform. The settlement creates a roadmap, but other states may form different views. As a proportion of total costs, they are relatively small, contributing 15% to total operating expenses. Banks and other capital providers with low cost of capital deposits build similar products. They give customers more reason to visit Affirm, and therefore drive purchase intent. Some clarity emerged in August this year when related litigation was settled in Colorado. To invest in the IPO, you need to believe the former. Affirm sought to bring clarity to e-commerce purchases, explaining upfront how much the consumer would end up paying and when Affirm expected them to do so. They clearly understand who they are, and they stayed that way throughout the entire pitch. These insights help the business decision-makers to formulate better business plans and make informed decisions for improved … When customers purchase something through Affirm, the only place to manage that transaction is on Affirm's site or app. No words needed. Favorite takeaway: The intro. Buffer is a social media scheduling platform that helps you schedule content to Facebook, Twitter, LinkedIn and Pinterest. LinkedIn . Favorite takeaway: It’s like having the keys to the kingdom. Third-party buyers pay a servicing fee of ~1.2% on their loans' unpaid principal balance, which appears as a revenue item on Affirm's income statement. All Rights Reserved. I love how the deck highlights a number of exit strategy options. Upon receiving funds from Affirm, Affirm's bank partner distributes the merchant fee to Affirm. The company raised $6 million with this deck. Amazingly, 46% of GMV is generated via no-fee 0% APR products. You need to describe your business using as few words as possible. Again, while some might point to this demographic and see BNPL's limitations, others will observe the opportunity. Affirm underwrites the consumer and provides loan pricing (0% - 30% APR) and payment options (three, six, or nine months). At the helm, we have serial entrepreneur Max Levchin. BNPL is in its early days. Affirm leverages Cross River's banking licenses and the range they provide. It will be essential to track how the various competitors in the market react as this industry evolves. In its S-1, Affirm insists that it is a payment platform and merchant network, not a lender. The Business Analytics Market has witnessed continuous growth in the past few years and is projected to grow even further during the forecast period (2019-2025). From an accounting perspective, there's an additional element to all this. The next nine largest merchants make up only 7% combined. It lags when looking at the number of transactions per customer. Affirm website and mobile apps are designed to capture the beginning of the consumer journey, provide a simple way to pay off loans, and lock-in future spending. The S-1 makes this pretty clear: Our business is subject to extensive regulation, examination, and oversight in a variety of areas, all of which are subject to change and uncertain interpretation. Facebook’s pitch deck was more a media kit of sort. A study conducted by the Federal Reserve in 2018 found that debit cards were the most widely used payment mechanism in the US, making up 28% of transactions, followed by cash (26%) and credit cards (23%). When it buys these loans from its originating bank partner, Affirm does so at a premium to market value, crystallizing a loss. "It's in his leg...we maybe have to cut it.". They not only measure page views but also analyze the actions people take. The creators of this deck also understood that one of the key concerns of an investor is the exit mechanism of his or her investments. This is a capital efficiency feature and will never make up a majority of revenue. This company is one of the greatest startup success stories of our time. Overall, the credit card industry was at 2.0% at the end of September and has experienced average delinquencies of 2.5% over the same three year period. For Affirm to be successful, they need to engage: consumers, merchants, bank partners, and third-party capital providers. Outside of capital cost (described above), Affirm's only other direct costs include servicing costs and credit losses. His current base salary is $10,000. As noted, Affirm's business model revolves around building products to facilitate online transactions between customers and merchants. This is Levchin's third act, and in many ways, it's all about getting the band back together from his previous two startups, Paypal and Slide. BNPL has seen strong adoption in categories like apparel, beauty, furniture, and electronics, which account for over $500 billion of retail sales. GMV rose by 75% in the last 12 months, driven by more consumers doing slightly smaller transactions. Forty-eight hours earlier, 90 miles north of Kyiv, a power plant had caught fire or exploded. One area of particular scrutiny is Affirm's embrace of the "rent-a-bank" model. The man in the uniform scanned Elvina, then Sergey, just a toddler. For Affirm and Levchin, money has its own morality. If Affirm can't find enough third-party capital, the business can't grow. At the point of sale, they select Affirm as a payment option. This includes the company's partnership with Shopify. Zuckerberg received $500,000 from Peter Thiel. Canvas replaces paper-based processes with affordable and easy-to-use mobile apps and forms. Rabois may have had a hand in recruiting Chief Legal Officer Sharda Caro del Castillo, given she worked as Payments Counsel at Square. Affirm operates in one of the most highly regulated industries in the US – consumer lending. The BNPL space is amid a land grab, making Martincevic's role vital. He previously served as CMO of Braintree and Venmo. Founders Fund, Khosla Ventures, Lightspeed Venture Partners, and Jasmine Ventures represent major contributors to Affirm’s $1.5 billion in financing, and are set for a major windfall. It had come from the north, not far from the power plant. Loans to consumers in New York, Connecticut, and Vermont are limited to their respective state usury rate cap. By doing so, Affirm upstreams competition, increase its value to third-party merchants, which could justify higher take rates, and can better drive repeat purchases by surfacing personalized offers to existing customers. Pessimists may imagine a world in which Affirm's unique value proposition disintegrates, becoming a commodity. The obvious "covid angle" for Affirm is Peloton and the rise of at-home fitness hardware, generally. Is Affirm a lender, selling a commoditized product? The almighty startup pitch deck that helped Buffer to raise half a million dollars, gained popularity by becoming one of the first pitch decks openly shared online. Decks don’t have to be formal or beautiful. Adpushup allows companies to maximize ad revenues through advanced A/B testing. While this might appear to validate industry concerns that BNPL consumers are overextended on credit, the study also illustrates that most customers could cover the cost of purchase upfront if they chose to. © 2021 Piktochart. In addition to the comparative parsimony of Affirm's model, younger customers valued the instant-gratification the platform enabled; the millennial's version of layaway. The rate on 0% APR loans is higher, and so, as they have grown to take a more significant share of GMV (45% in the most recent quarter, versus 27% the prior year), the merchant revenue rate has risen. Clearly, interest income on 0% APR loans is zero, but these loans still need to be funded, and they still expose Affirm to credit risk, so they come at a cost — hence the higher merchant network fees to compensate. Or Bank of America's? Zoom CEO Eric Yuan famously recruited heavily from former employers Webex and Cisco. Less the chaotic, distended America of today, more the fiscally unconflicted America of the 1980s, the America that greeted a young Levchin. One interesting and unusual note regarding Affirm's financing history is that it announced a $500M Series G raise in September 2020, just two months before filing for its IPO. We'd expect Affirm to learn and improve over time, but it's unclear what Affirm's unique advantages are in this arena. No one was sure, exactly, what had happened, though Elvina Zeltsman had an idea. 8. While small, this is a strategic mechanism for Affirm to earn more profit per transaction without introducing new consumer fees that would make Affirm less attractive as a payment mechanism. Per GlassDoor, 81% of reviewers approve of him as CEO. Compared to a traditional credit card, Affirm's "mistake-proof financing" promises zero late fees, favorable APRs, and a transparent payment schedule. Each of these open questions and unsolved risks opens up a line of attack for someone motivated to find one — the matter at hand may well be immaterial. He is a co-founder of Glow, a fertility startup, and on the boards of Unity Technologies and Mixpanel. With this context, we can understand the motivations behind Affirm's work here: to capture customers higher up the funnel. Or is it a payments network, capitalizing on changing consumer preferences to steal share from big banks? Favorite takeaway: The focus of the pitch deck was based on solid numbers such as their user engagement, traffic, and growth trajectory. This deck is a template they recommend following. To understand why Affirm's site and apps are essential, consider how Affirm acquires customers. The final element of costs is sales and marketing, which made up 12% of the past 12 months' cost base. Another former colleague, Keith Rabois, sits on Affirm's board. Sometimes her son would help her. Airbnb’s pitch deck has become a most used reference for entrepreneurs around the world. Merchant fees made up 53% of revenue in 3Q20. Castle is a startup that lets rental owners put their properties on autopilot. Favorite takeaway: This isn’t just a startup deck. The flow described is for loans held on Affirm's balance sheet. Affirm seems well-positioned within it to capitalize, though Klarna boasts a larger userbase, and Afterpay may be growing more quickly. Cookie Policy As the issuer, Affirm earns high-margin interchange revenue. The deck talks about how LinkedIn is “Networking for Businesses 2.0”. Favorite takeaway: Most startups are founded because of a problem they faced, but not many people tell their story well through their pitch decks. The change could be due to the capital Affirm raised in September, giving it the capacity to fund more loans off its balance sheet. As mentioned above, his lieutenants (and investors) are mostly people he has worked with previously. This reinforces the notion that Affirm is more commonly used to finance large purchases, at least when compared to its competition. Affirm's major BNPL competitors include Afterpay, Klarna, Quadpay, and Sezzle. In those formative days, they looked for highly competitive, well-read people who were proficient in math. The question emerged following the case of Madden v. Midland Funding in 2015 when the Second Circuit (New York, Connecticut, and Vermont) deemed that once the loan had changed hands, home state rate advantage disappears. Furthermore, the data suggests that many consumers initially try BNPL after they've tapped a significant portion of their credit capacity. The S-1 reveals that, as part of this deal, Affirm gave Shopify warrants to purchase up to 20.3 million shares for $0.01 each (!). The newly-minted Miami resident is having a banner year. As a result, Peloton is exploding, and, as an expensive, durable good, is the ideal purchase for Affirm to finance. As noted, Affirm's loans are technically originated by bank partner, Cross River Bank. This pitch deck example was used in a competition and was never used for raising money, but it’s still a powerful deck that startups can learn from. Keep your deck short (less than 20 pages). This deck was used to raised over $2 million dollars. Such growth requires contextualization, though — 28% came from a single merchant partner: Peloton. Please. Affirm says something different but related: it is ok to want; it is good to buy; there is a right and wrong way. PayPal co-founder Max Levchin is back. First, as alluded to, is his ability to recruit a strong management team. GMV typically gets a seasonal bump in the December quarter due to holiday shopping, so how the platform fares in the current period is critical. This allowed investors to see that they're not investing in a company that's losing, but rather one that's growing steadily over the years. Shortly afterward, he and his family emigrated from a tattered Soviet Union, arriving in the United States with $733 to their names. Beyond Khosla and Founders Fund, other winners include Lightspeed Ventures and Spark Capital, who joined in at Series B and Series C, respectively. The interstate regulatory arbitrage (originating loans in NJ to flaunt local usury laws) could become a matter of principle for a state official that sees a juicy opportunity to make an example of a tech company believing itself above the law. AppVirality allows app developers to grow their platform using growth method techniques proven by other startups. Favorite takeaway: The deck is sweet and short but effective. Today, we help them buy mattresses and sets of dishes; tomorrow, a used car, maybe a new car, then a house.". The wisdom of the company’s mooted $10 billion valuation may depend on the perspective of the investor in question. And finally, he came to Maksymilian. LaunchRock allows users to create landing pages and quickly get their startups known through social media, even before the launch of their full site. So ingrained was he in this world that he became famous for keeping a sleeping bag at the office, perhaps as he was building out the company's risk product. On top of that, the pandemic is shifting spending towards e-commerce in a dramatic fashion, giving Affirm more top of funnel opportunities. In addition to being CEO of Affirm, Levchin invests in companies through his venture firm SciFi and continues to incubate businesses out of HVF. Affirm sets up a payment plan with the consumer. An example screen is shown below. In particular, those licenses enable Cross River to lend in states where usury laws forbid high-interest lending. Finally, extremely low-interest rates mean lower credit costs, making 0% interest loans easier to stomach and more profitable. This detailed pitch deck outlines Square’s business model and a simple financial model that portrays their annual revenue and five-year growth rate. Selective enforcement by political actors will make these concerns major issues or minor technicalities. Mixpanel is an advanced analytics platform for mobile and the web. Let's take a look at the remainder of the all-star executive team that Max recruited to build Affirm. Square is a company that allows merchants to accept mobile credit card payments via a dongle. Products like the company's savings account may contribute to revenue, but it isn't their real purpose. Beyond that, all BNPL players observed appear to be expanding sales, customers, and transactions. Look at the takeaways from these startup pitch decks as a guide to help you in your quest to raise funds for your own startup. At this point, the diagram below breaks down because it doesn't highlight a critical cog in Affirm's machine: third-party capital providers. Nathan Gettings, Jeffrey Kaditz, and Alex Rampell joined Levchin in starting the business. Future performance hinges on credit losses not deviating too much from this. Alternatively, if you’re ready to create your own pitch deck, we’ve added some templates to the bottom of this article. They end up in one of two camps: 0% APR merchant. Favorite takeaway: The deck also provides an extensive analogy to showcase to investors what LinkedIn is. In addition, there is a small but growing revenue line from virtual card issuance. As a consumer lender going public through a splashy IPO, Affirm will be entering the public markets with a target on its back. Quarles was notably the CEO of Opentable after joining the company as the CFO in 2015. That figure dropped to $4.5 billion when excluding auto and gas sales and grew ~4% over 2018. After all, when was the last time you started your purchasing journey on Chase's website? With that caveat, 70% percent of users are female, 80% are between the ages of 19-34, and 60-65% earn less than $50K per year. Like many other public debutants this year, Affirm has yet to post a profit, with net losses of $120.5 million in 2019 and $112.6 million in 2020. Favorite takeaway: SOCIAL PROOF! The company is best known for its credit product that allows consumers to finance large online purchases at the point of sale over three, six, or nine months. Affirm's financial focus is the contribution profit extracted from its GMV. On the flight over, Levchin recalled asking his mother if they could spend $650 of it on a computer, to which she responded, "You're totally crazy, aren't you?". That doesn't necessarily signify Affirm's loan algorithms are getting smarter; it could mean Affirm is winning over increasingly affluent customers thanks to partnerships like the one it has with Peloton, for example. It’s all about hooking your audience. The average age of loans on Affirm's balance sheet is six months, but we expect it to come down, particularly with offerings like Split Pay. Since then, key banking regulators, notably the FDIC (Federal Deposit Insurance Corporation) and the OCC (Office of the Comptroller of the Currency), have ruled in favor of the model, but some individual states are still pushing back. Lockheed Martin has 5 employees across 64 locations and $65.4 b in annual revenue in FY 2020. Rabois served as COO of Square before becoming a full-time (and, of course, contrarian) investor. We’ve compiled a list of 30 of the best startup pitch deck examples to serve as inspiration. The thinness of this offering suggests merchants don't adopt Affirm for their robust product suite but for the uplift Affirm gives their business. The founder decided to put it up to help other startups to raise funds. Although Affirm takes provisions for credit losses upfront, at the same time as it books the merchant network fees, funding costs get spread out over the lifetime of the loan. She also had a stint at PayPal but after the eBay acquisition. While Affirm positions itself as a credit card alternative, the chart below leads us to believe the company can take share from other payment mechanisms. If you’re an established startup, you can follow this guide. As they traveled, news spread, so much so that by the time they disembarked near the Black Sea, they were greeted by police, equipped with Geiger counters. Favorite takeaway: This deck stands out! After going through so many decks, I recommend that your deck should also: If you’re looking for additional information, DocSend shared lessons they got learning from 200 startups who raised $360 million. That leaves lots of room to grow. Favorite takeaway: The deck has fewer than 13 slides but provides investors with knowledge of traction the site got going viral on social media and their go-to-market strategy. Second, Levchin appears to be reasonably well-respected by his employees. By definition, it is becoming a sweet target to investigate. Watch this demo for free to learn how to design it quickly and easily using Piktochart. This reflects ingrained behavior and comfort with existing methods and implies that consumers aren't loyal to any particular payment method. We are a bunch of curious and passionate people of different backgrounds and origins joined together for one mission - to empower people around the globe to tell powerful visual stories that matter. Levchin and Rabois have known each other since PayPal, where Rabois held the EVP of Business Development title. While other BNPL players pose a threat to Affirm, the company's real competition may be the status quo.
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