In an apparently unprecedented move, Sadi Khan, the 40-year-old CEO and cofounder of fintech startup Aven, says he and the company are donating "a few million dollars" to launch a new federal credit union. While the not-for-profit credit union will be independent, Khan hopes it will offer Aven products to its members and will advance his stated goal of lowering borrowing costs, particularly for homeowners.

Aven, based in the San Francisco Bay Area, offers credit cards grafted onto home equity lines of credit (HELOCs) of up to $400,000. The new financial institution it’s sponsoring, Haven FCU, will be based in Silicon Valley’s Santa Clara. Khan expects Haven to start offering digital banking products this year and to open a physical location over the next 18 months. He says the credit union’s management team will decide how many branches it opens.

Founded in 2019, Aven reached a $2 billion valuation last year. It has issued $4 billion in loans and has more than 75,000 customers. Aven targets consumers with prime and super prime FICO scores that are usually above 700.

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Credit unions are a unique type of financial institution because they’re not-for-profit and are owned by their customers (members). Their interest rates on loans–especially auto loans–and fees on credit cards are often among the lowest in the U.S. since credit unions are not incentivized to maximize profits and don’t have to pay federal income taxes. “The credit union is a very Americana object,” Khan says. “It really represents a by-the-people, for-the-people institution, which has always resonated with me.”

Khan was born in Bangladesh and raised in Toronto, and after he........

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