PawnGuru, a startup focused on digitizing the pawn shop experience, has raised $2.5 million in a Series A funding round. The investment was led by the Impact America Fund and Invest Detroit, with additional contributions from angel investors. Since its inception in 2015, the company has raised a total of $3.7 million.
Jordan Birnholtz, PawnGuru’s co-founder and chief operating officer, says the company plans to use the new capital to expand.
“We’re hoping to grow our presence in the U.S. and expand to Latin America,” Birnholtz explains. “We’ve found a lot of demand on our site from people who want to buy items from pawn shops.”
PawnGuru, based in Southfield and Ann Arbor, MI, runs an online marketplace where consumers can submit information about an item they’re hoping to sell and see how much money various local pawn shops would offer in exchange, allowing them to comparison shop. They can also buy and sell second-hand items on the site, no pawning necessary.
Birnholtz says PawnGuru completed a study in 2016 that showed offers for the same item vary between pawn shops in the same city by an average of 270 percent. Many people who rely on pawn shops for liquid cash are underbanked, he adds, so it’s critical that customers get the best offer for their merchandise. Going from shop to shop to find out who’s offering top dollar could take all day, but with PawnGuru, they can see the range of offers online, pick one, and head to the corresponding pawn shop to complete the transaction.
According to Birnholtz, PawnGuru so far has registered roughly 4,500 pawn shops nationwide and generated more than $14.2 million in offers. PawnGuru has more than 800,000 registered users, and has had millions of visitors.
“We’ve been laser-focused on growth, but lately we’ve also focused on making the experience as good as possible,” he says. “We realized we had a lot of people on our site, so we’re figuring out how to make it work better for our customers.”
PawnGuru sees the most activity in major U.S. cities like Detroit, Los Angeles, New York, and Chicago. The company is interested in expanding to Latin America, Birnholtz says, because it’s an underserved market with an economy that is quickly developing, and pawn shops have historically been an important source of cash there.
In the future, Birnholtz would like PawnGuru to work with partners on the ground in places like Brazil or India to better grasp what local users are looking for. “We want to be rooted in an environment and understand the needs of the community,” he says.
He’s particularly proud that his company has drawn support from Impact America, which he describes as a venture fund backing startups in communities that are traditionally overlooked by tech investors. In a statement, Impact America general partner Kesha Cash said, “PawnGuru recognizes the importance of pawn shops as community micro-finance institutions, and is using technology as a tool to enhance the transaction experience for pawn shop customers and owners.”
Birnholtz feels PawnGuru is offering something unique to the market and says the company has no direct competitors, but considers Craigslist and OfferUp to be its toughest competition.
“Pawn is really unsexy,” he maintains. “It’s not something a lot of investors or technologists think about.”
