Friday, May 17, 2024

Kafene Raises $14 Million In Series A Funding To Offer Buy Now, Pay Later To The Subprime

Do you know about the Buy Now, Pay Later (BNPL) model? If not, then check out this guide and gather a better idea about Kafene raising $14M to offer buy now, pay later to the subprime.

In general, Buy Now, Pay Later (BNPL) fury doesn’t go anywhere since many consumers are looking for alternatives to credit cards for funding their purchases.

Such purchases through that process are not exclusive to luxuries like jewelry or Pelotons that some might focus on online. During that time, a new fintech company for helping those consumers comes.

The company is ready to finance big-ticket items that are more ‘must have’ products than ‘nice to have.’ Therefore, the company has raised $14 million in Series A funding to achieve the goal without fail as per ai 50m azevedotechcrunch.

James Schuler and Neal Desai founded Kafene in New York in July 2019. The main goal of this pair is to promote financial inclusion by satisfying the requirements of what it describes as helping consumers who professional lenders leave behind. 

Kafene focuses on helping consumers with credit scores of less than 650 purchase retail products like appliances, furniture, and electronics with the BNPL model. Desai says that everyone can consider it as the Affirm for the subprime.

Third Prime Ventures and Global Founders Capital co-led the round that includes participation from Company Ventures, Valar, Gaingels, Hermann Capital, Uncorrelated Ventures, FJ Labs, and Republic Labs.

Wes Barton, the CEO of Third Prime, said that when you can access credit, you can use the credit card or go to the bank effectively. But when you have some unexpected expense and miss the payment with the bank, there may be a consequence, and you may fall into the debt trap. 

The flexible ownership model of Kafene is specifically designed not to let such issues happen to the consumers. For a particular reason, someone has to give up the payment, then Kafene comes to choose the item, and customers are no longer under any obligation to pay for it proceeding further. 

The process works in that Kafene purchases the product from the merchant on behalf of consumers and rents it back to them for around 12 months. They can own the item when they complete all such payments. They get an essential discount when they make it earlier and when they can’t, then Kafene will reclaim the product and take the loan loss. 

Desai strongly believes that the modern take on the Rent-A-Center charges a lot of money for certain low-grade items. 

Barton said that it is also a particular item to credit cards and the size of that market is enormous. They prefer to take the more credit card business at a specific time and offer consumers the proper flexibility to quit at certain times and fly free when they can. 

Kafene claims such flexibility can help promote various financial inclusions by offering more consumer options for alternative forms of credit at POS (Point of Sale).

According to Desai, it can be helpful for people to increase their credit scores to the next level. It is mainly because, when they buy out of the loan before the one-year term, their credit scores increase since Kafene reports them as the positive payer. 

He also said that, during particular situations where they do not steal the product, their credit score enhances. They can also return it when they cannot afford it completely. They have a better credit score to qualify for the traditional loan product in the long run. 

Kafene rolled out the beta of the financing product in December 2019 and was forced to pause due to the COVID-19 pandemic in March 2020. Then the company dominated from March to June 2020 and again launched on July 2020 once the pandemic problem settled. 

Kafene stopped all kinds of enrolment with their merchants by October 2020 since it has more demand. It can handle largely fuelled by many people who are financially strained during the COVID-19 pandemic. The company effectively handled around $2 million a month in merchandise volume in March 2021. 

Kafene plans to scale its existing lease-to-own financing business nationally with its new capital. They are also planning to launch the direct-to-consumer virtual lease card.

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