FinTech News
Aven Raises $142 Million for Home Equity-Backed Credit Card
A company that offers a home equity-backed credit card has secured a new “megaround” of funding.
About the round:
This week, Aven announced that it had raised $142 million. The Series D was led by Khosla Ventures and General Catalyst while returning investors, such as Caffeinated Capital, Electric Capital, Founders Fund, and The General Partnership, also participated. Notably, according to the company, it has now reached “unicorn” status, meaning that its valuation exceeds $1 billion.
With the new funding, Aven intends to continue expanding its reach. In particular, while the card is currently available in 32 states, the company plans on reaching all 50 states by 2025. Additionally, the service intends to launch other products such as auto-backed cards, mortgage refinancing, and more.
Aven has also unveiled a new advisory board that will include Michael DeVito (former CEO of Freddie Mac) Tim Mayopoulos (former CEO of Fannie Mae), Jim Messina (former Deputy Chief of Staff to the White House under the Obama administration), and Kevin Warsh (former member of the Board of Governors of the Federal Reserve System). This advisory board will help the company scale while also working to protect cardholders.
About the Aven card:
With the Aven credit card, homeowners can get a credit line of up to $250,000. According to the company, card approvals can happen in as little as 5 minutes with closings as fast as 15 minutes. The card carries no annual fee and customers only pay for what they use. Cardholders can also earn 2% cashback on purchases made with the card as well as 7% cashback on hotel bookings via the Aven travel portal.
Aven’s HELOC card offers APRs as low as 7.99% — up to 15.49%. As a result, the company notes that cardholders can transfer balances from their unsecured credit cards in order to save 50% or more in interest each month.
What they’re saying:
Commenting on the idea behind the card, Aven co-founder and CEO Sadi Khan said, “We believe there’s no reason for anyone who owns an asset and has good credit history to use unsecured credit. Full stop. Unsecured credit is expensive and unhealthy. With our asset-backed credit cards, we give consumers credit for what they own – saving them thousands of dollars without sacrificing convenience.”
Meanwhile, Khosla Ventures’ Vinod Khosla noted of Aven, “By using technology to drive efficiency, Aven has built a product that responsibly helps drive down the cost of capital by over 50% for most US homeowners who are using alternative credit cards.”
My thoughts:
Aven’s home equity-secured credit card is an interesting concept. As the company points out, those who are able to obtain a low interest rate could save money by transferring their other credit card balances. Of course, even as a homeowner and personal finance writer, I can’t exactly speak to all of the pros and cons of this option as it’s still new.
Nevertheless, judging by the investors Aven has attracted and the advisory board members they’ve managed to secure, it seems that the company really has something good going. With the firm on track to reach its 50-state goal in the coming months, it will be very interesting to see how its product impacts the market.
Author
Other Articles by Kyle Burbank
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