<p><img src="https://static2.businessinsider.com/image/6000a902b805070018995308-800/jeremy-2.jpg" border="0" alt="jeremy liew lightspeed" data-mce-source="Lightspeed" data-mce-caption="Jeremy Liew is a partner at Lightspeed Venture Partners who found hot startups like Snapchat and Whisper before everyone else."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Fintech startup Affirm is soaring in its first week on the public markets. Its first-day pop turned into <a href="https://markets.businessinsider.com/news/stocks/affirm-stock-price-extends-post-ipo-surge-public-trading-debut-2021-1-1029969869">a two-day surge</a> and as of market close on Thursday, it has a market cap of $27.9 billion. </p><p>While the spotlight is on its <a href="https://www.businessinsider.com/the-colorful-life-and-career-of-affirms-max-levchin-2021-1">famed founder and CEO, Max Levchin</a>, he's not the only one who is celebrating.</p><p>Lightspeed partner Jeremy Liew co-led Affirm's Series B round of venture funding in 2014, the first round where traditional VC firms like Lightspeed were offered a piece of the company. (Levchin is so well connected, angel investors funded the company until then, according to Pitchbook information). </p><p>Back in 2014, the company's "buy now, pay later" lending platform, was still an infant idea.</p><p>But Liew's early bet paid off. Lightspeed owns just under 19 million shares in Affirm, according to <a href="https://www.sec.gov/Archives/edgar/data/1820953/000110465921002724/tm2026663-17_s1a.htm">its S-1 filing</a>, making its stake worth around $2.15 billion at the close of market trading on Thursday, with shares at $114.94.</p><p>But the story of how Liew landed the first venture check in Affirm isn't about how a VC went out on a limb to take a daring bet on an unproven founder. </p><p>It's about duking it out with all the other VCs who wanted in and walking away a winner.</p><h2>Hotly contested</h2><p>Even before Affirm took off, Levchin was the type of <a href="https://www.businessinsider.com/the-colorful-life-and-career-of-affirms-max-levchin-2021-1#levchin-founded-affirm-in-2012-11">genius founder with humble beginnings</a> that every Silicon Valley investor wanted to back. </p><p>A Ukrainian immigrant, Levchin rose to fame as a founding member of the "PayPal Mafia," serving as the payment company's CTO and alongside Peter Thiel and Elon Musk. </p><p>He hit his first big pay day when eBay acquired PayPal in 2002 for $1.5 billion and used his money to found the social media startup Slide three years later. By the time he began fundraising for Affirm in 2013, his stellar track record also included over a decade as Yelp's chairman and three years on the board of Yahoo. </p><p>Everybody wanted in, Liew recalls.</p><p><strong><em>Read more:</em></strong><em> <a href="https://www.businessinsider.com/the-colorful-life-and-career-of-affirms-max-levchin-2021-1">Affirm's Max Levchin is about to become a billionaire. Here's a look at his storied life and career.</a></em></p><p>"It was definitely a company that was hotly contested, with Max having the high profile that he had," Liew told Insider in an exclusive interview. "He had relationships across the Valley."</p><p>Like other top venture investors such as Founders Fund's Thiel and Benchmark's Peter Fenton, who also sat on Yelp's board, Liew had known Levchin for years. When the serial founder started Slide in 2005, he had actually asked Liew to be his COO. (Liew turned down the offer, taking up an investing position at Lightspeed instead, where he's still a partner today.)</p><p>But what distinguished Liew's relationship with Levchin, and ultimately encouraged the founder to choose Lightspeed, was a deep, intellectual affinity the two developed over big data and artificial intelligence, and a shared excitement about how those technologies could transform the loan underwriting market, Liew said. </p><p><img src="https://static2.businessinsider.com/image/6000a788a81ea100188db4c2-2309/GettyImages-1041068546.jpg" border="0" alt="Max Levchin, Affirm CEO" data-mce-source="Getty" data-mce-caption="Max Levchin, Affirm CEO"></p><h2><strong>Deep technical expertise</strong></h2><p>Levchin first started Affirm in 2012 as a part of HVF, the incubator he had created to start companies that leveraged large data sets in new ways.</p><p>While he took an initial round of financing from close friends in 2012, including Peter Thiel, Levchin wasn't completely convinced he wanted to return to fintech, Liew says.</p><p>Still, Levchin saw the promise of using artificial intelligence to more accurately assess lending risk, which was normally calculated through credit data.</p><p>That was where Liew came in. The Lightspeed investor had known Levchin for years, but the two began spending more time together during the early days of Affirm. Liew was also becoming interested in startups that were experimenting with using big data and machine learning to underwrite loans.</p><p>Liew, for example, had just invested in a company called ZestFinance, now called Zest AI, which developed a new underwriting model that helped financial service providers better understand the creditworthiness of their borrowers. </p><p>Levchin's old company, PayPal, had pioneered the use of artificial intelligence for fraud detection. But the idea of using the technology for determining credit risk was still new in the early 2010s, Liew said.</p><p>So Levchin turned to Liew for insights on Affirm and the loan financing market. The two met once every couple of months, sharing their thoughts about competitor companies and broader industry trends. </p><p>Liew, who was on Australia's national math Olympiad team in high school and studied math in college, understood the technical intricacies of the new underwriting algorithms Levchin was building for Affirm. And that, he says, helped him land an initial investment in the company, and a board seat for Lightspeed, which he still holds today.</p><p>"I think he appreciated that we had a pretty good understanding of the business that he was going to get into. And that we might be helpful, informed board members and advisors," he said of himself and his Lightspeed partners.</p><p>Liew ended up leading Lightspeed's investment in Affirm in 2014, which the firm led alongside Khosla Ventures. (Keith Rabois, the lead partner on the deal for Khosla, took the COO position at Slide shortly after Liew declined.)</p><p>And since then, Lightspeed has been a follow on investor in each of Affirm's subsequent fundraising rounds, where other notable venture firms like Thiel's Founders Fund, GGV Capital, Andreessen Horowitz, and Spark Capital have joined.</p><h2><strong>Bright future prospects</strong></h2><p><a href="https://www.businessinsider.com/affirm-ipo-revenue-valuation-stock-should-i-buy-filing-fees-2021-1">Affirm will face challenges</a> as it continues to grow in the public market, including rising competition from other buy now, pay later startups and a need to wean its heavy dependence on Peloton, the merchant partner which accounts for nearly 30% of the company's sales, according to IPO paperwork. </p><p>But Liew says he's confident in the company he first invested in seven years ago. He believes young people will continue to look for more flexible payment options than credit cards, which often come with the late fees and penalty interest rates that Affirm avoids.</p><p>For another, he says the pandemic has accelerated the trend towards ecommerce, which will generate more demand for Affirm's loan financing services. In addition to Peloton, the company's merchants include Walmart, Adidas, Nordstrom, and Pottery Barn, according to its website. </p><p>The company's success is also a promising sign for other companies in the industry looking to go public, Liew added.</p><p>"I think what Affirm shows today is that there is actually a very viable, standalone path for successful fintech," he said.</p><p><strong>Now read:</strong></p><p><a href="https://www.businessinsider.com/max-levchin-couldnt-get-car-loan-so-he-founded-affirm-2021-1">INTERVIEW: Max Levchin couldn't get a car loan, so he founded Affirm. The buy now, pay later fintech raised $1.2 billion in its public markets debut</a></p><p><a href="https://www.businessinsider.com/here-are-the-venture-investors-that-will-win-biggest-on-2021-ipos-2020-12">Venture investors like Andreessen Horowitz, GGV, Coatue and others are already set to have a big 2021. Each has multiple IPOs in the works.</a></p><p><a href="https://www.businessinsider.com/how-lightspeeds-jeremy-liew-became-affirms-first-institutional-investor-2021-1#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/transgender-activist-former-white-house-intern-sarah-mcbride-isnt-discouraged-by-trump-2018-3">Sarah McBride made history becoming the first openly trans person elected to a state Senate seat. In 2018, she explained why the Trump administration wouldn't discourage her work.</a></p>
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