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.
The biggest news this week was the Funding Circle announcement of their $65 million funding round. This was covered by most major business publications including Bloomberg Businessweek, Forbes, Fox Business and the San Francisco Business Times. Below is the rest of this week’s news.
International P2P Lending Services – Loan Volumes June 2014 from Wiseclerk – The loan numbers for June of all the major European p2p lenders.
Prospect Capital Corporation’s 30% Yielder from the Motley Fool – Interview with the president of Prospect Capital, a BDC that is taking a keen interest in marketplace lending today.
Repeat Borrowers – Relationship Lending for the Modern Age from Orchard – I have always liked investing in repeat borrowers so I appreciate this analysis by David Snitkof.
Tim Simon, CEO of Madiston LendLoanInvest, Talks Future of Peer to Peer Lending from Crowdfund Insider – Interview with the CEO of one the up and coming p2p lenders in the UK.
Liberum Invest in Australia’s Leading Short-Term Lender from AltFi – Interesting investment by Liberum, joining a former Lending Club executive in investing in an Australian lending startup.
Mad Rush at Lending Club Loan Release Time: Part V – Loan Term with Time to Fund from PeerCube – The latest episode in the excellent series analyzing Lending Club’s loans and the time it takes to fund them.
LendingRobot Can Improve Returns in Peer Lending from LendingRobot – How Lending Robot scores loans to try to maximize returns for p2p lending investors.
Must See LendIt Videos for Retail Peer Lending Investors from Peer & Social Lending – Ryan shares his favorite LendIt 2014 videos from the Demos and Workshops track.
Non-bank loans: Quick, easy…and addictive? from CNN Money – There are plenty of good alternatives today for small business owners seeking loans.
Harmoney Gets First P2P Lending License in New Zealand from Crowdfund Insider – Under New Zealand’s new regulatory framework Harmoney is the first platform to receive a p2p lending license.
From the Lend Academy Forum
The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.
Chargeoff Rates vs Time – Some excellent charts and discussions about the charge-off rates for consumer debt. A good reminder to all p2p investors.
Automated Investing Campaign – Discussion as to why Lending Club is promoting their automated investing option so much.
What TERM loan do you invest in? – A survey along with interesting commentary by investors about 36-month versus 60-month loans.
I thought the Prospect Capital article had a thought provoking point when Eliasek commented:
“If we’re going to be supplying loan capital to an originator [Prosper/LC], let’s capture the potential equity upside from the originator itself. [by investing in the company’s stock as well]”
We see the topic of buying LC stock becoming increasingly popular…
Hi Chris, Agreed, there is great interest in the space from all kinds of investors. And we all know there are going to multiple winners in the space beyond LC and Prosper. And I have heard from many institutional investors who have a similar approach to Prospect Capital.
Peter……….I know you have a real taste for Kool-Aid but what exactly did Chris write that you’re agreeing with? Because what Chris wrote was nothing but a complete misrepresentation of the interview in question.
At no point in the interview did Eliasek state any interest in capturing the equity upside of p2p by investing in the originator’s (i.e. LC) company stock. What he did in fact say was that his company (Prospect Capital) plans to become an originator itself by launching its own lending platform. The “potential equity upside” Eliasek was referring to was equity from his own future platform & from his own company. It had nothing to do with the topic of buying LC stock, as Chris has somehow bizarrely concluded.
Dan, I was agreeing with the idea that some investors want to invest in both the debt and equity side of the p2p platforms.
Dan,
I would agree that Prospect plans to build its own platform versus buying LC stock. They said as much explicitly when asked whether they would buy LC stock or own their own platform:
“We’re interested in owning our own platform or platforms, probably emphasizing small business first.”
and
“As a result, we’re currently looking to build our own origination platform or platforms, which we hope will generate greater origination volumes, higher direct yields, and potential equity upside from valuation growth in the originator itself.”
But the larger point I was thinking about was the overall concept of the effective “double down” position one would take by both making money from the loan and also making money from the loan issuing company at the same time. I was reminded of the topic (which has been on-going and outside the source article) when I read the following:
“Wathen: You mentioned equity returns coming out of the peer-to-peer lending?
Eliasek: Well, if you own an originator, you have an additional storehouse of value for the future. Lending Club’s last private round I think was $3.8 billion. Maybe it’ll go public later this year, maybe Prosper and On Deck a year later.”
The inference there that an investor could be buying debt on all three platforms and equity of all three platforms at the same time is the thought provoking part I was referring to in my original post.
Poor attempt at summarizing on my part in the first post. Hopefully this post will better communicate what I was getting at.
Yes it was a poor attempt at summarizing on your part previously……………which is why I asked what Peter could have possibly been agreeing with.
But aside from that, ………………Doubling down, as you call it, by both being lenders & also buying stock in LC, Prosper or whatever other company, will certainly give us the potential to make a better return etc etc. However it’s hardly the semi no brainer that you seem to be casually implying. Even if p2p becomes a household name in a few years & far exceeds the most rose colored expectations, investing on the equity side of every outfit around would still have many dangers, perhaps more dangers than other types of companies.
Look, no one can argue that 100 or so years ago the car transformed the way we as a planet lived. It was invented around 1890. By 1930 there was close to 50 million cars in the US, most of them manufactured right here. It was a staggering sales success of a new destabilizing/transformative product by any measure & has continued its staggering success these past 100+ years. Yet if you had invested in almost every single one of those early American car manufacturers you would have lost your entire investment in almost every case……………….& you would have done so within just a few years of your investing. Do you want to take a guess as to how many US car companies went out of business in just the first 20 years of the car??
Investing in a company just because it does p2p loans is about as smart as investing in a company just because it sells or does this or that. I have every confidence that investing & picking winners in the equity side of future p2p companies will prove similarly challenging & very far from a no brainer.