LendingRobot, who previously only offered automated investing for consumer loans through Lending Club and Prosper announced today that they will be adding small business loans through Funding Circle to the mix. Peter and I had the chance to talk to Emmanuel, the CEO of LendingRobot to learn more about the partnership and where he sees the future of investing in marketplace lending.
Existing investors on LendingRobot can expect a similar user experience with the addition of Funding Circle. Once users create an account with Funding Circle they can then link their account to LendingRobot. They have implemented the same functionality as they have done with Lending Club and Prosper just with a different dataset. Users can set rules, priorities, and filter by credit rating, interest rate, years in operation etc. On top of that, LendingRobot will have other criteria including profit margins, debt to equity ratio among others. Investing on Funding Circle is limited to accredited investors only.
Earlier this year, we wrote about Funding Circle’s fractional marketplace which previously had a minimum overall investment of $50,000 with a minimum of $1,000 per loan. We learned while talking to Emmanuel that these restrictions have changed, which makes this integration much more appealing. There is now no minimum opening balance, but there is a minimum investment of $500 per note. Investors can diversify their investment across many loans without having to manually select the loans on FundingCircle.com.
We asked Emmanuel what drove them to make the decision to add Funding Circle to their platform. He said that they asked clients what they could do to improve and the overwhelming response was that they want more lending platforms to invest on. Out of the responses, Funding Circle was one of the most popular choices. Beyond that, it is LendingRobot’s belief that as the industry becomes more mature, investors are going to want to increasingly build a diversified portfolio in several verticals all in one place. In an ideal world, LendingRobot customers could invest in consumer credit, education loans, commercial real estate, small business etc. which each offer a different beta.
LendingRobot’s approach is similar to other robo-advisors like Betterment that balance allocations across stocks worldwide. Emmanuel believes this is where the market is going. They will continue to promote the idea of a diversified portfolio by adding leading platforms and Funding Circle is the first step in that direction.
LendingRobot is solving a need for investors in this industry. Many investors choose to invest in both consumer lending platforms (Lending Club and Prosper) which is two logins. However, if you add in retirement accounts, a spouses account and other platforms, it can be overwhelming to manage. Things quickly become complicated and if there is a way to aggregate this into one platform for a small fee, investors are going to do so. With this partnership, LendingRobot is not just targeting retail investors, but now high net worth investors as well. For those interested, LendingRobot offers their service for free for accounts up to $5,000 managed and 0.45% per year above that amount.