Borro, the U.S. and UK-based online platform that people borrow money and put up luxury items as collateral, is today announcing $19 million in new funding led by strategic investments from Israel’s OurCrowd and Berlin’s Rocket Internet.
CEO and founder Paul Aitken tells me that the funding will be used for two main areas: moving into new geographical markets and more financial services. Specifically, tapping into Rocket Internet’s expertise, Borro will soon be making its way to entering emerging markets in South America and Asia, and using know-how from OurCrowd it plans to expand the instruments that it uses to finance its loans, with new features including a LendingClub-style crowdfunding platform, and more extended loan times beyond the six-month range Borro offers today.
Although Borro is not disclosing its valuation, Aitken tells me it is a “significant upround” compared to the company’s last $26 million equity raise. Some $6 million of the round being announced today came from OurCrowd (which claims this is the “world’s largest equity crowdfunding round” ever), while Rocket Internet — which had helped to seed the company in 2009 — increased its stake to 10%. Existing investors Canaan Partners, Eden Ventures, and Augmentum Capital also participated in the funding round.
All told, it took only about four weeks to start and close this round, he says.
The $19 million equity investment in the company comes less than a year after Borro raised $112 million from Victory Park Capital to fund loans on its platform. To date the company has raised over $200 million, combining both debt and equity rounds.
Aitken tells me that part of the reason for raising the funding now was because of the company’s growth. Borro is “just shy of breakeven”, with revenues growing at a rate of about 80% annually. Last year, the company made slightly under $20 million in sales on $75 million in loans. It is currently on a runrate of $100 million for this year, with total assets under management in 2014 exceeding $200 million.
Aitken tells me that around around 45% of the goods put up as collateral against loans on its platform are fine art and antiques, with another 40% jewellery and watches, 7-8% is classic cars and the balance is handbags and fine wines. Currently the average value of objects is around $50,000 but looks like it is coming down somewhat to around $45,000 as the business grows. Typical money payouts range from $5,000 to $2,000,000.
Borro sits in the same category of fintech as companies like LendingClub, Funding Circle, Kabbage and TransferWise — with all of these providing online platforms to carry out financial services in a faster and often more cost-effective way than incumbent providers like brick-and-mortar banks — or, in Borro’s case, consignment shops.
Borro up to now has been unique among these in that it targets a very specific group of high net-worth individuals, along with their financial planners and accountants. The introduction of new routes to finance the business could potentially widen the field to include would-be financial investors who are interested in putting up capital to finance these loans.
The involvement of Rocket Internet is interesting, too. The Berlin-based company is known more for incubating and growing its own e-commerce and fintech businesses. This, however, is a sign that, as a newly public company, Rocket is perhaps looking to expand its horizons and become more involved in companies that are more diversified and less home-grown. (It also means it’s less likely that Rocket Internet will launch a clone to rival and break down competition against Borro.)
Notably, although Borro works a lot with auction houses today — when consignees do not pay back their loans, that’s where many of the items they’ve put up as collateral end up — it’s not working with any as strategic investors at the moment. “It’s a good point though,” Aitken says, “because I think there are a lot of interesting synergies there. Maybe Borro will eventually buy its own auction house or site. There are a lot of directions we could go.”