By Riley Kaminer
Miami-based Pigeon Loans can help. The Y Combinator-backed startup has developed a platform that makes it easy for users to lend each other money. The premise is simple: One party sets the terms of the loan, including the interest rate. They send that to the other party to sign, creating a legally-binding contract.
Typically, loans on the platform are between friends and family members. Pigeon Loan takes the awkwardness inherent to such a transaction out of the equation by automating the payment reminders.
The startup has now raised a $2.5 million seed round to further build out the platform. The seed raise was led by FundersClub with participation from other investors including Miami investors 305 Ventures, Ascendo Venture Capital, Dhuna Ventures, and Pareto Holdings.
In an interview with Refresh Miami, co-founder Kaben Clauson explained that Pigeon Loans will use the funds to launch the third iteration of their platform.
“That will be a huge user experience overhaul,” Clauson said. “It’s going to streamline the loan process to where someone can use our product in less than five minutes.”
After that, the team’s sights are set on building a mobile version of the platform, as well as working on a tool to give borrowers a boost in their credit score when they pay back their loans.
Clauson noted that this fundraise will also enable Pigeon Loans to spread the word about their platform. “We’re doing that through partnerships with banks, financial advisory groups, and small business groups,” he said. “A lot of these groups are places where people go to for capital, and we want to be a trusted third party where people can use our product to avoid the awkwardness of these loans that they’ve traditionally faced in the past.”
This $2.5 million will also fund the expansion of Pigeon Loans’ four-person headcount, which is on track to soon double. “We’re hoping to hire as much as possible in Miami,” said Clauson, who acknowledged that the team has seen benefits from working in-person.
Since co-founder Brian Bristol began working on what would eventually become Pigeon Loans in Summer 2020, the company has amassed upwards of 20,000 users. One challenge the team has faced is that not all those users have been able to actually get a loan from Pigeon.
“There is a large percentage of people that simply don’t have a friend or family member who can help them with all their costs,” Clauson said. However, the team hopes to address this in part by developing a product that is a web3 take on charitable giving – but details are currently under wraps.
“About one third of Americans are cut off from the traditional credit system,” said Clauson, noting a recent Bloomberg finding that 26 million Americans borrowed from friends and family in 2021 – up from 19.5 million in 2020. “We’re trying to serve these folks that are hurt by the pandemic and the current economic uncertainty and don’t have alternative sources of funding.”
Photo at top of post: Pigeon Loans co-founders Kaben Clauson, left, and Brian Bristol.
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