Affiniti, co-founded by Aaron Bai, 20, and Sahil Phadnis, 22, is developing innovative expense management software tailored for small businesses, a field traditionally dominated by larger tech startups. Their rapid expansion led to securing a $17 million Series A funding round from Signal Fire, just six months after raising $11 million in seed funding.
Innovative Financial Solutions for SMBs
The platform provides customizable expense management credit cards and software aimed at specific sectors such as pharmacies, HVAC companies, and auto dealerships. This approach mirrors successful strategies from established fintech companies like Brex and Ramp. Traditional small businesses have numerous options for credit cards from major banks; however, Affiniti distinguishes itself by offering what Bai refers to as “v3” of fintech. He explains that while earlier versions improved user experience and financial data access, v3 emphasizes actionable analytics and advisory services tailored to businesses lacking dedicated finance teams.
Strategic Growth and Product Features
Affiniti’s recent funding will facilitate the integration of enhanced features, including banking, bill payment, cash flow analytics, and connectivity with various software systems such as enterprise resource planning and point-of-sale applications. Current offerings include customizable cash-back rewards and short-term loans of up to 90 days against invoices, alongside the availability of native QuickBooks files.
Targeted Niche Market Approach
The founders did not follow the typical startup path through programs like Y Combinator; instead, they leveraged networks established during their time at UC Berkeley and developed partnerships with industry trade groups. This strategic move not only legitimized their startup among potential clients but also provided advantages such as group purchasing discounts. Phadnis noted their focus isn’t on serving every small business in America but rather selecting niche markets with intricate cash flow requirements.
Impressive Customer Growth and Revenue Trajectory
In just 14 months, Affiniti has grown to serve 1,800 customers, processing nearly $20 million monthly in transactions, and is on track for $1 billion in transactions by year’s end. The company primarily generates revenue through transaction interchange fees while also earning from SaaS offerings and interest on short-term loans. Although specific revenue figures were not disclosed, Phadnis indicated a significant growth trajectory, estimating a tenfold increase over the past year, having escalated from one million dollars to ten million dollars in revenue.
Investor Support and Future Outlook
The Series A round attracted additional investments from notable individuals such as Codie Sanchez of Contrarian Thinking Capital and founders of TrueBill and Morning Brew. Prior support included seed investments from Indicator Ventures, Lightshed Ventures, and RiverPark Ventures, alongside a $15 million debt facility that could extend to $50 million.