Affiniti’s 20- and 22-year-old founders raise $17M led by SignalFire just 6 months after an $11M seed

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Affiniti founders Aaron Bai, 20, and Sahil Phadnis, 22, are building the kind of expense management software for main street small businesses that tech startups have enjoyed for years.

Their growth has been so impressive that six months after raising an $11 million seed round, they raised a $17 million Series A, led by Signal Fire, they told TechCrunch exclusively.

Affiniti offers SMBs like pharmacies, HVAC companies, and auto dealerships customizable expense management credit cards and software similar to the kind of wares pioneered by Brex and Ramp.

But traditional small businesses already have credit card options galore from the likes of American Express and Capital One as well as traditional banks. Why would they choose Affiniti?

Because, Bai says, the startup is offering what he calls “v3” of fintech. In his view, v.1 is traditional banks and credit cards. Brex and Ramp represent v2, which brought improved UX design and better access to the financial data generated by expenses.

“V3, in our opinion, is a fintech product that can actually advise the end users and give them analytics,” Bai says. “These traditional small businesses don’t have a finance team.”

The Series A cash will help the startup launch features like banking, bill pay, cash flow analytics, and integrations with more software like enterprise resource planning and point-of-sale apps.

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Currently it offers features like customized cash-back rewards, native Quickbooks “qbo” files — not just CSV files — and short-term loans, up to 90 days, against invoices.

Interestingly, unlike so many founders in their 20s, Affiniti didn’t come from a startup school like Y Combinator. They didn’t have to, the founders said. They met while attending UC Berkeley, which helped them form a solid network in Silicon Valley for introductions to VCs and others. And they also came up with a marketing move on their own, partnering with specific industry trade groups, like ones for independent pharmacies, they said. 

This not only helped validate the startup to potential customers, but gave them immediate access to features like group purchasing discounts. “We’re actually not trying to boil the ocean when it comes to working with every SMB in America,” Phadnis said. “We’re selecting a couple niche verticals with complex cash flow.”

All of this worked well enough for Affiniti to go, in its first 14 months, from zero to 1,800 customers and about $20 million a month in transaction volume, Phadnis said. The founders think the platform is on track to $1 billion worth of transactions by the end of the year.

As the startup earns most of its money on transaction interchange fees — although it also sells SaaS software, and earns interest income on those short-term loans — this has meant rapid revenue growth. 

While the founders wouldn’t reveal their current revenue, Phadnis offered a you-do-the-math hint: Revenue grew around 10x in a year. “12 months ago, we were at a million dollars. So 10x is a lot,” he said, smiling.

Other investors in the Series A include Codie Sanchez’s Contrarian 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. Affiniti had also previously signed a $15 million debt facility, capable of growing to $50 million, with its earlier seed round, it said.