Eric Lefkofsky and Brad Keywell, the visionaries behind daily deal giant Groupon, are putting their money where their mouths are with a new investment in an online pawn shop startup.
The Groupon founders have pumped $2.3 million in Series B funding into Pawngo, previously branded “Internet Pawn.” The company provides “short-term loans” up to $15,000.
Pawngo serves a vital function, say its owners, particularly in this difficult economy. Most loans, which are in the range of about $2000, are sought when bank loans are unavailable and credit cards can’t yield the necessary cash.
To use the service, applicants complete an online form listing items they want to pawn and Pawngo. Within one hour, the company replies with how much it will loan the person for the items in question.
Once Pawngo evaluates and authenticates the item, Pawngo emails an offer for how much it’ll offer for the pawn. People can accept the offer and the money will be transferred to their bank accounts. Or they can decline and Pawngo will Fedex the item back for free.
According to Forbes, the average loan period is three to four months at annualized rates spanning 36% to 72%.
So far, Pawngo says, approximately 90% of customers have paid off their loans and regained possession of their items.
“We’re giving a loan against your past,” says says Todd Hills, co-founder and CEO of Pawngo. “We’re not asking you to leverage your future… You don’t risk debt like with other lending companies. You’re only risking the collateral.”
Given Pawngo’s surge in popularity and usage in recent months, its clear that Groupon’s founders are banking on continued growth in an age-old industry that has finally gone digital.