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PawnHero: Taking the Shame Out of Pawning

Does anybody like going to a pawnshop?

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BY Melissa G. Bagamasbad - 27 Apr 2016

Pawning one’s goods is tinged with shame. Buying pawned goods is tinged with guilt. That's why David Margendorff founded PawnHero in the Philippines, where he says only 20% of citizens have bank accounts and only 5% have a credit card, making the pawnshop an unavoidable source of cash for poorer Filipinos.

“What really drove me to set up PawnHero was that we can solve a real problem that millions of Pinoys can relate to,” he says. “Part of the motivation is to be a real ‘Hero’ in educating Filipinos on better options for themselves when they need money.”

The 32-year-old German-born founder of PawnHero is a serial entrepreneur, starting his first business in e-commerce at the age of 16, after which he studied business in London, Buenos Aires and Barcelona. His first stop in Southeast Asia was in Malaysia where Margendorff was part of the founding team that built the country's leading financial comparison website. From there, it was a quick jump to the Philippines, where he has been for the past three years. 

PawnHero received initial seed-funding from the CEO and owner of Philippine-based 2Go Group, Sulficio Tagug, who believed in the concept. It also received funding from global venture capital firms like Softbank, 500 Startups (Founder of PayPal) and IMJ Investment Partners. After starting with five employees in January, 2015, PawnHero now has close to 50 employees spread across three offices in two countries. “We expect to grow to over 100 people by year end, across three {Southeast Asian} countries,” says Margendorff, including Vietnam.

These are the four ways in which PawnHero has disrupted an industry badly in need of it.

1. It's more transparent than a traditional pawnshop

Margendorff said that he tried many different pawnshops locally, and found there was a big problem with transparency. “It's hard to understand the interest rates and how they work, there are many hidden costs, and even the value of an item varies from one shop to another. I realized that, with a concept like PawnHero, I could provide a reliable, transparent way for Filipinos to access cash. By taking it online, I also found that the whole experience can be made more convenient and discreet.”

2. It doesn’t invest in shops, and passes the savings on to its customers

Unlike the traditional pawnshops one may see in the Philippines, PawnHero differs by not having a physical branch. “We don't invest in and maintain any physical branches,” explained Margendorff. “This reduces the overhead costs significantly. We don't have to pay rent on multiple sites, we employ fewer people--in short we are more efficient.” Margendorff explained that this has allowed them to pass on what they save from a purely online operation onto their customers in the form of a significantly lower fixed interest rate (usually half of that what traditional pawnshops charge). He added that they also do away with any hidden costs and charges. “We really want to be the ‘good guys,’” says Margendorff.

3. It aims to serve a majority of Filipinos

PawnHero aims to provide reliable financial services to the majority of Filipinos who don't normally have these options. These are those who already use traditional pawnshops to one extent or the other, as well as those who don't but also can't get loans from banks or other financial institutions. “We particularly want to reach out to the masa who tend to have a wide gap between what they need to spend for – whether daily needs or emergencies – and a reliable source of funds to meet those expenses.”

4. It accepts a wider variety of items than do other pawnshops

Margendorff explained PawnHero also aims to broaden its scope by accepting more kinds of items that other pawnshops don't. So while it'll accept smartphones and other gadgets that almost everyone has, it'll also accept appliances, equipment, artwork, motorcycles, and more. “In essence, we're tapping also those who are asset-rich but cash-poor and giving them a way to monetize what they already own,” explained Margendorff.

For more information on PawnHero, visit it online at


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