Borro, The High-End Online Pawnshop, Raises $112M To Fill Its Finance Pool, Expand In U.S.
TechCrunch Meetup And Pitch-Off In Beirut Tonight — Borro, an online platform that lets people borrow cash and put up luxury watches, art and other fine goods as collateral …
Context & Ripple Effects
Borro's pitch since its 2012 $26M round led by Canaan Partners has been bridging pawnshop and bank: consumers pledge watches, art and other fine goods as collateral and borrow against them entirely online. The new $112M raise, reported by TechCrunch on March 4, 2014, is aimed squarely at filling the company's lending pool rather than at product development.
The story traveled widely for a niche consumer-finance play — pickups from Re/code, PE Hub Blog and FinSMEs all carried the same announcement — which suggests investor and press appetite for alternative-credit models was running well beyond the usual venture audience.
First-order effects
- Borro gets immediate balance-sheet capacity to write more luxury-collateral loans and push its platform into new U.S. markets, where brick-and-mortar pawnshops have historically owned high-value collateral lending.
Second-order effects
- Regional pawn chains and auction houses handling consigned luxury goods face a competitor whose funding cost comes from institutional capital rather than storefront economics, pressuring the fees and appraisal terms they can charge borrowers.
Third-order effects
- If large pools keep flowing to online lenders against hard assets, luxury goods start functioning as an investable asset class with dedicated underwriting infrastructure — a category sitting between consumer credit and private banking, with regulatory scrutiny of online lending likely to follow the capital.
The trend: Consumer lending is migrating online asset class by asset class — first unsecured personal loans, now luxury goods held as collateral — with each raise enlarging what institutional capital will underwrite.