You don’t need to be a seasoned ecommerce analyst to appreciate that, in the second decade of the twenty-first century, it’s possible to buy just about anything on the web. And online cash borrowing platform Borro sees no reason why ecommerce shouldn’t extend to being a high-end virtual pawn shop.
Co-headquartered in New York and London, Borro (which launched in 2007) recently successfully closed a private equity round totaling $112 million courtesy of Victory Park Capital. It doesn’t take a genius ecommerce analyst to work out why: last year, Borro made $17 million in revenue on the back of the $50 million it loaned. This year, revenue is expected to hit $30 million and the loan pool is on course to expand to $100 million.
Customers needing cash can, if they have the items, go to Borro’s website and put valuable objects up as collateral (i.e., anything from fine art to fine wine, with jewelry, precious metals, luxury cars and watches welcomed too). Borro then sends one of its specialists (objects experts from various fields) to personally visit the client, evaluate and authenticate the item and take it back with them in exchange for cash (usually, 65 to 70 percent of the item’s market value).
Customers keep the money for a set time (typically six months), following which they can repay it, usually at an interest rate of between 3.5 and 4 percent. If they decide to keep the money, Borro sells the collateral – but, interestingly, if it goes for a price above the one consigned, the extra cash goes back to the customer.
Ecommerce analysts skeptical about the potential for a firm like Borro to keep in profit might change their minds when they hear its founder and CEO Paul Aitken address the issue. He told TechCrunch journalist Ingrid Luden that as ecommerce matures, people are becoming accustomed to bigger online transactions. He said:
“We’re seeing a lot more opportunities in the $50,000 loan plus range. If you look back three years our average loan was couple of thousand dollars, but now it is $12,000. Bigger-ticket clients are coming in and using our services.”
The new investment will be ploughed into increasing the pool of available loan money and expanding to another US office (possibly LA or Las Vegas).