Pigeon Loans Lands $2.5M Seed Round to Improve Lending Platform
By Riley Kaminer
Based in Miami Loans pigeons can help. The Y Combinator-backed startup has developed a platform that makes it easy for users to lend money to each other. The principle is simple: one party sets the terms of the loan, including the interest rate. They send it to the other party for signature, creating a legally binding contract.
Typically, loans on the platform are between friends and family members. Pigeon Loan eliminates the clumsiness inherent in such a transaction by automating payment reminders.
The startup has now raised a $2.5 million funding round to further develop the platform. The fundraising 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 Miamico-founder Kaben Clauson explained that Pigeon Loans will use the funds to launch the third iteration of their platform.
“It will be a huge overhaul of the user experience,” Clauson said. “This will simplify the loan process so that someone can use our product in less than five minutes.”
After that, the team aims to create a mobile version of the platform, as well as work on a tool to give borrowers a boost in their credit score when repaying their loans.
Clauson noted that this fundraiser will also allow Pigeon Loans to raise awareness of their platform. “We do this through partnerships with banks, financial advisory groups and small business groups,” he said. “A lot of these groups are places where people go to seek capital, and we want to be a trusted third party where people can use our product to avoid the embarrassment of these loans that they’ve traditionally faced in the past.”
The $2.5 million will also fund the expansion of Pigeon Loans’ four-person workforce, which is expected to double soon. “We’re hoping to hire as many as possible in Miami,” said Clauson, who acknowledged the team has seen the benefits of working in person.
Since co-founder Brian Bristol started working on what would become Pigeon Loans in the summer of 2020, the company has amassed over 20,000 users. One of the challenges the team faced was that not all of these users were able to get a loan from Pigeon.
“There’s a large percentage of people who just don’t have a friend or family member who can help them with all of their costs,” Clauson said. However, the team hopes to solve this problem in part by developing a product that is a Web3 version of Charitable Giving – but details are currently under wraps.
“About a third of Americans are cut off from the traditional credit system,” Clauson said, noting a recent Bloomberg discovery that 26 million Americans borrowed from friends and family in 2021, compared to 19.5 million in 2020. “We are trying to serve those people who are suffering from the pandemic and the current economic uncertainty and who have no no other sources of funding.”
Photo at top of post: Pigeon Loans co-founders Kaben Clauson, left, and Brian Bristol.
LEARN MORE ABOUT REFRESH MIAMI: