Affiniti founders Aaron Bai, 20, and Sahil Phadnis, 22, are building the kind of expense management software for small and medium-sized businesses on Main Street, which tech startups have enjoyed for years.
Their growth is so impressive that six months after raising a $11 million seed round, they told TechCrunch they raised a $17 million Series A led by Signal Fire.
Affiniti offers customizable expense management credit cards and software for SMBs, including pharmacies, HVAC companies, and car dealers.
However, traditional small and medium-sized businesses already have credit card options from traditional banks such as American Express and Capital One. Why do they choose affinity?
Because, according to Bai, the startup offers what he calls fintech’s “V3.” In his view, V1 is traditional banks and credit cards. Brex and Ramp represent V2, which has improved UX design and increased access to cost-generated financial data.
“V3 is, in our opinion, a FinTech product that can actually advise and provide analysis to end users,” says Bai. “These traditional small businesses don’t have a financial team.”
This Series A Cash helps startup launch capabilities, including banking, invoice payments, cash flow analysis, and more integration with more software such as enterprise resource planning and point-of-sale apps.
It currently offers features such as customized cashback rewards, Native QuickBooks “QBO” files (not just CSV files), and short-term loans for up to 90 days on invoices.
Interestingly, unlike many founders in their 20s, Affinity didn’t come from startup schools like Y Combinator. They didn’t have to do that, the founder said. They met while attending Berkeley, California. This helped to form a solid network in Silicon Valley to showcase VCs and others. And, like independent pharmacies, they partnered with trading groups in specific industries to come up with their own marketing moves.
Not only did this help validate the startup to potential customers, it also gave me immediate access to features such as group purchase discounts. “When it comes to working with all the SMBs in America, we’re not actually trying to boil the ocean,” Fadnis said. “We’re choosing some niche verticals with complex cash flows.”
All of this is working enough for Affiniti to go from 0-1,800 customers in the first 14 months to a trading volume of around $20 million a month, Phadnis said. The founders believe the platform is on track to make $1 billion worth of transactions by the end of the year.
As startups make most of their money on interchange fees for trading – they also sell SaaS software and earn interest income on those short-term loans, which means rapid revenue growth.
The founder did not reveal his current income, but Fadonis provided you with tips for your do the mass. Revenues increased by about 10 times over a year. “Twelve months ago, we were millions.
Other investors in Series A include Codie Sanchez’s reverse thinking capital, Yahya Mokhtarzada (founder of Truebill), and Austin Rief (founder of Morning Brew), the startup says.
Seed Investors Indicator Ventures, Lightshed Ventures and RiverPark Ventures also participated. Affinity had previously signed a $15 million debt facility, allowing it to grow to $50 million, growing in its previous seed round.