Lease-to-Own FinTech Kafene Nets $18M to Expand Team

Lease-to-own (LTO) FinTech company Kafene has raised $18 million in a Series B funding round and will use the new capital to help more merchants offer LTO financing to underserved consumers.

Kafene’s platform is used by merchants at the point of sale to offer consumers transparent LTO agreements, according to a Tuesday (Sept. 13) press release.

The LTO agreements primarily serve the underbanked, including the one-third of Americans who have credit scores that limit their ability to purchase big-ticket items, per the release.

“We’re extremely excited to be doubling down on partnering with merchants to offer more flexible ownership options precisely when they’re needed most, and right at a time in which others have retreated and tightened their credit boxes,” Kafene CEO Neal Desai said in the release.

Kafene’s platform uses an underwriting model that allows for financing to be tiered based on actual risk, making it more affordable for underbanked customers and enabling merchants to reach more customers, according to the press release.

Many of Kafene’s customers are near-prime or subprime consumers who don’t have access to conventional consumer loans, or even buy now, pay later (BNPL), Kafene CFO Roland Jeon told PYMNTS in an interview posted in August.

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“What we’ve done is we’ve taken the lease-to-own construct, which is a very old construct that’s usually been captive in stores like Rent-A-Center, and we’ve digitalized it, virtualized it, to increase distribution and increase access to a lot of variety of consumer sets,” Jeon said.

With the newly raised capital, Kafene will increase its headcount to meet merchant- and consumer-driven demand for technology-enabled purchase options, the release stated.

“Kafene continues to grow in scale and valuation, and we’re thrilled to have like-minded investors who share our vision and belief that today presents a powerful opportunity to take our platform and relationships to the next level,” Desai said in the release.