There is probably no bigger name in venture capital than Kleiner Perkins (officially known as Kleiner Perkins Caulfield Byers or KPCB). They are one of the stalwarts of Silicon Valley having invested in such household names as Amazon, Google, Compaq, Groupon and AOL. Now, they have added Lending Club to that list of companies.
Today, Lending Club announced (press release is here) a $15 million equity investment from Kleiner Perkins. At the same time Kleiner Perkins partner Mary Meeker has been appointed to the board of Lending Club. Along with John Mack’s recent $2.5 million investment this brings the total capital raised by Lending Club to $100 million. More importantly it brings the total cash on the balance sheet to around $45 million.
Here is what Mary Meeker had to say about Lending Club in an official statement:
“Lending Club is helping reinvent the consumer lending industry. It’s the kind of opportunity that Kleiner Perkins is interested in and I knew I wanted to be involved.”
There is no word yet on what valuation this gives Lending Club but it is safe to say it is at least the $275 million valuation that was achieved with the Series D funding round last summer. We will get a pretty good idea when they file their 8-K form with the SEC shortly.
Obviously this is good news for Lending Club and for p2p lending in general. The team at Kleiner Perkins have identified and invested in many companies that have brought quantum shifts in the business landscape. I was told that Kleiner Perkins approached Lending Club directly even though they were not looking for new investors. No other investors were invited to participate in this round.
Here is what Lending Club said when I asked them about this new investment:
While we didn’t need the funds, we were presented with the opportunity to bring on KPBC as a partner and to welcome Mary Meeker to our board. We jumped at the chance of being associated with a firm and a partner that is virtually synonymous with the breakthrough brands we love like Amazon.com, Google and Twitter. The funding will provide resources we need for potential strategic initiatives in the medium to long term.
With this much cash on the balance sheet Lending Club can take their time before reaching profitability. Amazon took over seven years to post a profitable quarter and Lending Club is not even five years old yet. Although I don’t think Lending Club will wait two more years before reaching profitability it might not happen as soon as I originally thought – which was by the end of this year. Regardless, with their rapidly increasing loan volume and large cash war chest they have never been in a better position.