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Lending Club's first company acquisition is Springstone Financial

First, let me say this is not an April Fools joke. This announcement from Lending Club today is very big news and it is real. Lending Club has just closed on their first acquisition and it is not an online lender – they are buying a traditional lender called Springstone Financial for $140 million in a cash and stock deal.

Springstone Financial, not to be confused with Springleaf Financial, is a consumer lender based in Massachusetts, just outside of Boston. They have two divisions: a patient financing business that provides loans for people seeking elective medical and dental procedures as well as a tuition financing business for K-12 private school education.

Lending Club Raises a New $65 Million Round at a $3.76 Billion Valuation

Despite all their recent success Lending Club does not have $140 million in cash sitting on their balance sheet so they needed to raise more capital to finance this transaction.

Part of this financing was a $65 million equity capital raise from T. Rowe Price Associates, Inc., Wellington Management Company, LLP, BlackRock and Sands Capital. While Lending Club did not share their valuation for this raise it is not difficult to work out from their 8-K filing. Lending Club is now valued at nearly $3.8 billion (up from $2.3 billion just last November).

This $65 million equity round only got Lending Club part of the way there. They also took on $50 million in debt financing and the remainder of the deal ($25 million) was paid for in Lending Club stock. Which basically means no cash whatsoever came off Lending Club’s balance sheet to finance this deal.

Who is Springstone Financial?

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Going out of Business

Last year at LendIt 2013 we featured a number of P2P lending start-ups in our exhibit area in order to learn about the next new thing.  There was one company in particular that had a great mission and a great story that we were excited to feature.  This company was called Funding Community (we wrote about their launch here).

Their mission was to develop a small business P2P lending platform so that the local community could fund their local businesses.  In exchange, the small businesses provided deals and discounts to their lenders, who often became their most loyal customers.  We loved their local social ecosystem approach, which gets to the essence of what makes peer-to-peer lending so amazing.  They made it personal and supportive.

So it came with great disappointment when we heard that Funding Community was shutting down.  But the story is not over.  Not only has Funding Community bought-out all outstanding loans to make their lenders whole, but also one of their co-founders, Alex Binkley, has decided to write a post-mortem to share his lessons on the successes and failures of his venture.  Funding Community is showing us how to fail with class, dignity, and honor.  It takes courage to publicly speak about a failure and we applaud him for that.  We can all learn from his lesson.

Here are my lesson’s learned after reading this story:

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New White Paper on the Regulation of Peer to Peer Lending

April 14, 2014

Samuel Hu, an attorney at Chapman & Cutler LLP in New York, has been an occasional contributor here at Lend Academy. He wrote this post on p2p lending regulation a year ago and now he is back to share his updated white paper with us. I chatted with Hu last week when he reached out [...]

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Peer to Peer Lending News Roundup – April 12, 2014

April 12, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here. New Age Lending and the Evolution of Credit from Huffington Post – From the founder of LendingTree a look at the different [...]

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LAP11: Interview with Ron Suber of Prosper

April 10, 2014

I was in San Francisco last month and I sat down with Prosper president, Ron Suber to record this conversation for the next edition of the Lend Academy Podcast. Ron Suber was part of the executive team that took control of Prosper early last year and they have been on a roll since then. As [...]

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Lending Club and Prosper Tax Information for 2014

April 9, 2014

[Disclaimer: I am not an accountant nor am I qualified to provide tax advice. This post merely shares how Lending Club and Prosper are presenting their tax information this year. You should seek professional advice before taking action on any of the ideas presented here.] I know I am late with the tax post this [...]

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SoFi Raises a Huge Series C to Expand Beyond Student Loans

April 7, 2014

[This post is by Jason Jones, one of my new partners at Lend Academy. He has been following SoFi since they launched and believes they are a very important player in this space. - Peter] The name SoFi is interesting, it is short for Social Finance.  When Mike Cagney chose the name, we think it [...]

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Peer to Peer Lending News Roundup – April 5, 2014

April 5, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here. What’s Next for the Peer-to-Peer Lending Industry? from DepositAccounts.com – A wide cross section of thoughts on the future from many leaders [...]

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Lending Club to Stop Daily Updates of New Loans

April 4, 2014

For three and a half years now I have been keeping close track of the lending volume at Lending Club and Prosper. Regular readers are used to seeing my end of month updates with the loan volume charts. Well, that is all about to come to an end, at least where Lending Club is concerned. [...]

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Prosper Crosses $1 Billion in Loans Issued

April 3, 2014

Today is a big day for Prosper. They have now issued more than $1 billion in total loans – crossing that milestone this morning. They have an official press release announcing the story and they also created this very cool infographic to celebrate. In addition they announced this giveaway on their blog last week that [...]

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