Southeast Asia’s first digital pawn shop Pawnhero has raised a PHP 500 million (about US$9.7 million) financing deal with an unnamed investment bank.
Backed by Kaikaku Fund, IMJ Investment Partners, and 500 Startups, Pawnhero’s Chairman and Founder David Margendorff said, “The credit line agreement will allow PawnHero to grow its loan book and service more customers.”
Besides, the company has also inked a partnership agreement with FINTQ, the fintech arm of telco giant PLDT and Smart’s Voyager Innovations which the nation’s first online marketplace for consumer loans Lendr.
The partnership will allow Pawnhero to become the first digital pawn shop available in the Lendr marketplace and further expand its reach through Lendr’s digital and mobile platform which reportedly covers 90 percent of the 145 cities in the Philippines.
Since its launch in 2015, Lendr has disbursed more than PHP 23 billion in loans to 200,000 clients, registering an annual growth rate of 50 percent in loans released and a 33 percent increase in the number of borrowers.
Also set up in early 2015, Pawnhero has registered with the Philippine Central Bank, otherwise known as Banko Sentral ng Pilipinas to expand the access to affordable financial services to unbanked and underbanked Filipinos.
“With the service we provide, we are not just helping the immediate financial needs of the average citizen, but we are also making them aware of the positive effect of being in a financially included state,” Margendorff explained.
According to the central bank, 86 percent of Filipino households do not have a bank account and only about two percent of households have credit cards.
FINTQ managing director Lito Villanueva explained, “Pawnshops are ubiquitous among Filipinos as a source of accessible, fast secured short-term credit.”
“PawnHero has led innovations in this space by fully going digital and we’re excited to see them as part of the Lendr marketplace,” he said.
Last year, PawnHero has bagged the gold prize at the Hack Osaka International Pitch Contest, beating nine other teams from Europe and Asia.
PawnHero’s services are said to be ideal not only just in the Philippines but can help improve financial inclusion in other growing economies as well to become the major financing method of banking for the underbanked.
“This is a clear and positive indication that the country is on its way to becoming more developed in digital finance as compared to a few years ago,” said Margendorff. “As one of the fastest-growing economies in the world, the potential here is almost endless.”