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Online lender Affirm acquires Sweep in a play for financial planning services

Sweep had raised around $1 million in seed funding.


Affirm, the online lender started by PayPal co-founder Max Levchin, works by extending loans to customers of partnered retailers. The thinking is that by working with people buying pricey stuff like, say, mattresses, Affirm gets to offer financing plans before those customers ever set foot in a bank or visit a rival internet lender.

Today, Affirm is announcing it has acquired the technology, staff and assets of Sweep, a financial planning app that works sort of like budgeting service Mint. Though terms of the deal were not disclosed, Affirm growth and new markets VP Brad Selby told Recode that "everyone but one guy" on the five-person Sweep team would be joining the company. He says that while there are plans to launch an Affirm-branded Sweep app later this year, the current app will shut down in the meantime.

Sweep co-founder Jackson Gates, who used to do business development at Pandora, made the connection between what Sweep and Affirm do in an interview.

He explained that while Sweep had done "a lot of different work" on different ideas for money management services, the core of Sweep was about "forward-looking cashflow management," or "identifying potential shortfalls" — like being a couple hundred bucks short on rent — "before users experience them."

For an Affirm borrower, this could make it easier for the company to nudge you about when your next payment is due and whether you’ll be able to make that payment based on what the app knows about your cash flow.

When Intuit bought the budgeting/planning service Mint in 2009 for $170 million, there were (and are) a lot of different products in the space. And increasingly, companies in adjacent financial tech spaces are adding those similar services. For example, automated investment ("robo-adviser") services like Betterment or Wealthfront both now have an expansive suite of financial management tools.

Neither Selby nor Gates said that there were current plans to integrate with such services, and that they don’t expect Affirm to stray too far from the lending business.

"As a recovering product guy, there’s so much to do in the world that we’re in, as far as lending and where lending can help people," Selby said. "We don’t want to get too far afield from that."

Affirm raised $100 million in equity and debt financing from investors earlier this month, looking to expand the number of stores it currently works with — such as online mattress retailer Casper, second-hand fashion store The RealReal and music gear seller Affirm backers include Founders Fund, Spark Capital, Andreessen Horowitz and Khosla Ventures. Like rivals SoFi or Upstart, Affirm uses data science technology to value the creditworthiness of potential borrowers, instead of traditional credit measurements, like FICO scores.

Gates said that he had met with Affirm several times late last year about a potential partnership, but that eventually it became clear that Affirm should just buy Sweep. He said his startup raised around $1 million in seed funding before the deal.

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