By Judith Balea for TechinAsia
Manila-based fintech startup PawnHero today announced an undisclosed amount of pre-series A funding from SoftBank-affiliated Kaikaku Fund, which is focused on the Philippines, 500 Startups, and IMJ Investment Partners.
Company co-founder and chairman David Margendorff says they will use the fresh capital to hire more staff and continue “mass outreach” in the Philippines so “even more Filipinos will know that they can pawn online without leaving their homes, at half the interest of what other pawnshops charge.”
Launched in February 2015, PawnHero has pioneered the concept of an online pawnshop in Southeast Asia, where credit remains expensive and inaccessible for the poor.
The company is giving traditional pawnshops a run for their money by offering half of the monthly interest they offer, and accepting items such as gadgets and electronics apart from jewelry as deposit.
All a customer needs to do is take a picture of the valuable they wish to pawn and in minutes, they’ll receive an estimate for their item. They may choose to have the item picked up by PawnHero’s logistics partners or drop it off at any affiliated stores nationwide. The whole process is convenient, and also breaks the stigma around pawnshops as it eliminates the need to line up at physical outlets, which can be embarrassing and intimidating for some.
What’s more, customers don’t need to own a bank account to get the loan; PawnHero provides a free debit card they can use to withdraw at any ATM or shop at merchant stores.
Aside from the interest on the loans, PawnHero earns revenue by selling pawned items on itsestore in case the borrower defaults.
“Most startup investors don’t go to pawnshops to get loans. But millions of people in Southeast Asia do every day,” says 500 Startups managing partner Khailee Ng. “PawnHero will literally change their lives, and in the process, the region’s next big startup success story will emerge.”
“The online pawnshop is exactly the kind of innovation I believe can help unbanked citizens. The Philippines is the ideal market to start the service, as pawning is the major financing method instead of banking for its people,” adds Yasu Seo, general manager of IMJ.
PawnHero recently won the 2016 Hack Osaka pitch competition in Japan.