Announcing the Launch of Lend Academy Investments

Lend Academy Investments

Today is a big day for me and for Lend Academy. We are officially expanding our horizons into investment management with the launch of Lend Academy Investments. This is not a solo venture. I have partnered with two financial services veterans, Bo Brustkern and Jason Jones, in creating Lend Academy Investments, which is an SEC registered investment adviser focused on the p2p lending space.

Lend Academy Investments is all about making p2p lending easier to access for individual investors. Regular readers know the impact that institutional investors have had on this space and we want to turn the tables on that. We give individual investors a professional money management option using the same tools as the big guys. More on that later. First, I want to give you a bit of background.

How Lend Academy Investments Was Born

It was around two years ago when I first received an email from a reader asking if I would help manage their investments on Lending Club and Prosper. I thought about it at the time and decided against pursuing it. But on a semi-regular basis since then I have continued getting more requests like that one.

I began to think I really should expand into investment management but wasn’t sure I could do it by myself. That was my challenge; I didn’t have any background in finance. Then last year, through my work on the LendIt Conference, I met Jason Jones and Bo Brustkern. I enjoyed working with these gentlemen both of whom have a strong background in finance.

So when I got a call from Jason last summer about joining up with him and Bo to create a new investment management firm, I started to think about it more seriously. One of my concerns was that I wanted to maintain my independence and continue my work writing here at Lend Academy. Thankfully, they were not only supportive on this idea, they were insistent that I continue exactly as before. In fact, I believe Lend Academy will become even more valuable because both Jason and Bo will also be writing informative articles now in addition to my own.

In the end the decision was relatively easy. Investment management is a natural progression to the work I do here. And I feel this is a way I can help more people in a very tangible way. While I will continue to write about the leading industry players and share my investing knowledge, I know that many people simply do not want to do the work to invest themselves.

There are tens of millions of investors who have money in the stock market. But the vast majority of these people do not choose individual stocks and trade their own accounts. They invest in mutual funds and ETF’s and have a professional money manager make their investing decisions for them. I expect the same will happen as this industry continues to grow.

The Lend Academy Investments Service Offerings

1. Separately Managed Accounts at Prosper (in beta)

Our Separately Managed Account service is open to all eligible Prosper investors. Lend Academy Investments is hired as an investment advisor, our clients select an investment strategy and instruct us to manage their account on their behalf. We offer two flavors:

a) Conservative: We deploy a conservative loss minimization model to invest in the loans that we think have the lowest likelihood of default, which are mainly AA and A grade loans only. Our target Net Return (after fees) is 5%.
b) Balanced: We deploy a diversified filter that invests in every loan grade. Our target Net Return (after fees) is 7.5%.

Our minimum investment size is $25,000 and our annual fee is 0.95% of assets. We are currently in beta but are open for both accredited and non-accredited investors. Please bear with us during our beta launch. Our on-boarding timing and our process controls may be slower and more cumbersome than expected as we perfect our back end systems.

2. Lend Academy P2P Fund*

Our P2P Fund will be diversified across both new and established P2P platforms from around the world. We are launching with three leading US platforms: Lending Club, Prosper and Funding Circle USA. The goal of our P2P Fund is to provide access to the online lending asset class. In many ways, it is a reflection of the LendIt Conference in its diversification. We will apply sophisticated credit modeling while taking a moderately aggressive approach with our investments. Our P2P Fund offering will be for accredited investors only with a minimum investment of $250,000. Our annual management fee is 1.5% and our target Net Return (after fees) is 10%.

The online home for Lend Academy Investments is https://invest.lendacademy.com/. There is some basic information on that site now and we will be expanding it over the coming weeks and months.

My passion for this industry is only increasing. I truly believe that every eligible investor should have the opportunity to invest in p2p lending in his or her investment portfolio. And now for people who don’t want to do their own investing we are happy to provide an attractive solution.

You can read an article about our launch on Bloomberg today and our official press release is here.

* Lend Academy P2P Fund is offered solely to accredited investors (as defined under Regulation D of the Securities Act of 1933) who can demonstrate that he or she is qualified to invest in the Fund by a third-party verification under Rule 506(c) of Regulation D and who agree to be bound by the terms of the Fund’s offering documents.

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writing2reality
Mar. 4, 2014 11:06 am

Congratulations Peter! This is big news for P2P Lending, and especially for those looking for a truly passive means to invest in the space. I wish you and your partners the best of luck.

Matt Kiggins
Mar. 4, 2014 11:16 am

Peter, congrats to you and the rest of the team at Lend Academy Investments on your recent launch! We here at Millennium Trust Co are very excited about the opportunity to work with you as you look to take the P2P space to another level. All the best!

Adam Limbach
Adam Limbach
Mar. 4, 2014 1:11 pm

Congratulations and best of luck to you. Do you intend to use leverage in the P2P fund? Obviously you can either target 11.5% gross-of-fee returns either going after riskier credits if you think you have a better scoring model than Prosper/Lending Club or lever investments in higher quality loans.

RawRaw
RawRaw
Mar. 4, 2014 2:09 pm

Congratulations Peter! I’m sure you’ll be a success

Chris
Chris
Mar. 4, 2014 3:23 pm

Wow! Congratulations Peter! What does this mean for the blogging/news/podcast nature of the website?

B. Mason
Mar. 4, 2014 9:30 pm

Congrats on the excellent news. I’m sure there’s a lot of hard work ahead, but it’s good to know that you’ll enjoy it. May the money tree flower!

Sean Murray
Mar. 5, 2014 12:25 pm

Funding Circle USA is small business oriented if I’m not mistaken. It’s an entirely different type of risk. Have you invested in Funding Circle’s loans already? Have you found it to be a different experience than investing in consumer loans?

Neal S
Neal S
Mar. 6, 2014 12:28 pm

So, Peter, you have gone to the “dark side”! We still love you anyway!

Jilliene Helman
Mar. 7, 2014 12:18 am

Congrats, Peter! An amazing evolution and I can only begin to imagine how many clients you will benefit. You’ve been an inspiration for me personally in the P2P world and I wish you and the team amazing things with this new endeavor.

Jerry B
Jerry B
Mar. 7, 2014 9:54 am

Good luck Peter, however I am very disappointed that the P2P fund has such a large minimum. Do you see anything in the future with lower minimums and high yields?

Greg Campbell
Mar. 7, 2014 10:02 am

congratulations Peter. This is a natural evolution that I believe will help accelerate the interest and growth of the sector. I hope to see the fund expand beyond the US to incorporate the rapidly developing P2P market internationally.

Aaron Hill
Mar. 7, 2014 10:22 am

That’s what we are looking for! That excites us!

“Readers will be getting more than one perspective from now on.”

“Just trying to give people more options.”

“You look to take the P2P space to another level.”

Looking forward, Peter and the Lend Academy!

To the prosperity!

James
James
Mar. 7, 2014 11:04 am

Peter,

I’m a big fan of what you are doing and the P2P movement. I wish you success and agree that this is a great move for you and the industry. Thank you for your service.

For those of us that are not 1%ers, not “accredited investors”, diversity is just as, if not more, important. The P2P Fund provides both diversity across platforms and a significantly higher rate of return that we will not have access to. I do understand that when dealing with larger accounts, some costs will go down as the number of clients that need to be serviced is lower. However, I think you should consider something like the P2P Fund for us middle class folks with the diversity from the 3 different loan originators and a target of around 9%. I’ve been picking loans by hand so far, but it is getting harder. As the world pays more attention to this lending model, I fear that scrappy DIY middle class folks are going to get increasingly squeezed out.

James Wood

James
James
Mar. 8, 2014 1:01 pm
Reply to  Peter Renton

Thanks for addressing my concerns Peter. In the mean time, following your advice and my own back testing, I’ll continue as a self guided investor running my own models. Right now I’m self employed and have the time to do this as well as log on at odd times of the day to snatch up the best of the new releases. A lot of people can’t easily do that so moving toward a platform diverse fund with a strong rate of return for retail investors is a goal that I hope you can reach down the road. Thanks for all the good work.

James

Marsha F.
Marsha F.
Mar. 8, 2014 12:02 am

Hi Peter,
We were excited when we heard about your new endeavor until we saw the minimum and accredited investor status required. Really ? People who can afford to drop a min. $250k on P2P don’t need the help. As James puts it – we middle class folk are the ones who need the help. Right now the institutional investors and big money are making it hard to get good loans on Prosper. They are slurping up everything in sight, leaving us with the leftovers. Prosper is allowing people who have 100+ deliquencies to apply for loans and approving them! Do they really think someone with that history is going to pay it back ?! We can’t even invest in LC due to the state we live in. I love P2P and people helping people, but I fear it won’t be around much longer with the corruption that comes with companies who can buy and control everything.

ga
ga
Mar. 8, 2014 7:46 am

hmmm.

I agree with above comments. I believe you’re intentions are good Peter, but the unintended consequences may push out us smaller investors.

This will certainly help line the pockets of big investors, but create challenges for the rest of us. It’s just another form of an institutional investor in my opinion. Maybe it is inevitable anyway.

Glenn
Mar. 9, 2014 11:57 pm

Congratulations Peter!

All the best!

Glenn

SM
SM
Mar. 23, 2014 2:07 pm

One of the challenges I face with P2P is taxes (high income tax rates and limited opportunities for the capital losses of dud loans). Would the fund represent a way around this challenge? That is, would gains be treated as income or capital gains?