2017 Archives - Lend Academy

Prosper Reports Full Year 2017 Results

Prosper originated $2.9 billion in 2017 and now has surpassed $11 billion in total loans.

March 26, 2018 By Ryan Lichtenwald 2 Comments

Today, Prosper reported their full year results for 2017. Prosper is still a private company, but is regulated by the SEC which requires them to provide quarterly and year end results. Prosper’s full 10-K which includes all of the details about their business is available using EDGAR on the SEC website.

The company originated nearly $2.9 billion in loans, up from approximately $2.2 billion in 2016. From our perspective there were two major milestones for the company in 2017. One was the $5 billion consortium deal announced at the beginning of 2017 which was a commitment from investors to purchase loans over a two year time period. The company also successfully raised their Series G funding in September, 2017. As noted in our piece on the announcement this was a significant down round from their previous fundraise in 2015 but it reflected the reset expectations when it comes to valuations.

While the company had a net loss for the year of $115 million, this was largely due to the consortium of investors as noted in the press release: “Net loss of $115 million included $89 million of non-cash charges related to warrants to purchase preferred stock that were issued to a consortium of investors and a third party in connection with a settlement agreement.”

Adjusted EBITDA was $5 million, up $43 million from the year before and more importantly Prosper was cash flow positive for the year, generating just over $1 million in cash. Other financial metrics are shared below:

Prosper’s accomplishments in 2017 were critical to their success going forward. While there are no longer headlines touting massive growth at Prosper, they still are originating a significant amount of consumer loans and they are doing so profitably. The consortium secured investors for a 2-year period and they now have cash to invest in new projects. It’s going to be interesting to see what innovations come to bear in what seems like an ever increasingly competitive consumer loan market.

LendingClub and Prosper Tax Information for 2018

We share information related to filing your taxes with LendingClub and Prosper for the 2017 tax year.

March 6, 2018 By Ryan Lichtenwald 19 Comments

[Disclaimer: I am not an accountant nor am I qualified to provide tax advice. You should seek professional advice before taking action on any of the ideas presented here.]

For new investors in LendingClub or Prosper, it’s important to understand the documents you receive come tax time. For existing investors it’s important to be aware of any changes LendingClub and Prosper have made in their documents or the way the information is reported. Over time the documents have evolved, with both companies now providing a tax guide for their investors.

Note that investors who invest through a retirement account do not have to worry about tax reporting. Here at Lend Academy we believe there is a strong case for investing in marketplace lending through a product like an IRA. Here is our 2018 post on that topic if you’re interested in learning more about taxes and marketplace lending.

As you’re looking at the documents provided by LendingClub and Prosper you should understand at a basic level how profits and losses are reported. The interest or income from loan payments is taxed as ordinary income. Losses are either short or long term capital losses. Copied below is how LendingClub summarizes the tax treatment of investing in loans on the platform:

Generally, gains and losses from recoveries, sales or charge-offs related to LendingClub Notes are reported for tax purposes as capital gains or losses, rather than ordinary gains or losses. Generally, LendingClub Notes are considered capital assets because they are owned for the purposes of investment (similar to a stock or a bond). Generally, realized capital losses are first offset against realized capital gains. For individuals, any excess capital losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately). Capital losses in excess of this limit may be carried forward to later years to reduce capital gains or ordinary income until the capital losses are fully utilized.

Now that you have some background on the tax treatment, we can move into the details on how profits and losses get reported at LendingClub and Prosper.

Filing Taxes for a LendingClub Account

Note: If you plan to use TurboTax to file your taxes, LendingClub has a step-by-step guide on importing your forms here.

First you’ll want to navigate to “Statements” after logging into your LendingClub account. This can be done by clicking your name in the top right of the landing page once you login. On the next screen you will see a menu bar item titled “Tax Forms”. Clicking on the link will take you to another page which will include a link to your 2017 – 1099 Consolidated Package. Linked below your tax document you’ll find LendingClub’s provided 2017 Tax Form Guide. The guide does a great job of outlining which forms you will receive and where you should report this information when filing your taxes. The below table taken from the tax guide shares which forms you will receive. [Read more…]

Wide Range of Startups Demo at Finovate Fall 2017

We report on some of the interesting demos that occurred at Finovate Fall 2017

September 18, 2017 By Ryan Lichtenwald 1 Comment

Last week I spent some time at Finovate Fall 2017. The event has historically focused on company demos, where various companies showcase their product in a live demonstration. This year, they expanded their content to include panel discussions on days three and four. This was my first time attending Finovate and my primary interest was seeing some of the innovative things companies are working on.

There were over 70 companies demoing and I was not around to catch them all, but wanted to highlight a few of them here. The videos from the event can be found on Finovate’s website.

Fiserv

Fiserv is a technology solutions provider that provides a wide variety of services. For their demo they shared their solution for proximity authentication and integration with Alexa. They also have a browser that offers secure sign on across other web applications. What was most interesting with this demo was the integration with Alexa. Voice command is something that is becoming a bigger part of everyone’s lives and there are already many things you can do with these devices. Integrating voice within financial services makes a lot of sense and every bank is going to need this technology as consumers begin to demand it. Their proximity authentication can help better serve customers in branches. Fiserv is clearly on trend with this new product.

Jiffee

I have to admit that I am not a user of mobile payments, but Jiffee caught my eye for a few reasons. It is a mobile payments solution that works across both Android and Apple. They also offer a dongle for retailers to be able to handle contactless payments. While payments is somewhat of a crowded space with huge competitors such as Square, PayPal, Apple and Android I thought Jiffee has built a very easy to use solution. The audience agreed as they were one of the demoing companies to be awarded with a Best in Show Award.

Dynamics Inc.

Dynamics has created a next generation credit card, creating a battery powered card that can have a variety of features. Some of the use cases include being able to select whether you want to pay using debit/credit or what rewards you’d like to use for the transaction on one single card. Even more interesting was the ability to have a dynamic cvv (the three digit number on the back of your card) which could cut down significantly on fraudulent transactions. This type of technology is something I have never seen before so it was fascinating to see it in action.

Conclusion

Finovate attracts quite a broad range of fintech companies. These are the companies that are pushing finance forward and Finovate has created a venue for startups and established companies to share a glimpse of what we can expect in the future. There were many other demos that I missed so I’d recommend checking them out for yourself.

LendIt Europe Agenda Released, Discounted Pricing Ends Soon

Tomorrow is the last chance to receive the summer pricing discount for LendIt Europe 2017

September 7, 2017 By Ryan Lichtenwald Leave a Comment

LendIt holds the largest lending and fintech conferences across the globe and is also a sister company to Lend Academy. Each year we hold three events in the largest fintech markets: US, China and Europe. Our European event is just around the corner, taking place on October 9-10 at the InterContinental London at The O2. We’re excited to be holding our fourth European conference and the team has been hard at work to make this our best event yet.

Similar to our US event, we’ve broadened the scope of topics covered. Some of the new topics we’ll be digging into include AI, biometrics, blockchain and financial inclusion. We’ve also dedicated an entire track to digital banking, a segment which is getting significant traction across Europe. We’ll also be covering our core topics including innovations in lending, credit & underwriting and investor insights.

The full agenda is on the LendIt website, but here are a few topics I am most excited about:

How to Navigate Open Banking (Imran Gulamhuseinwala, Ernst & Young)
Digitization of Finance How Customer Expectations are Changing (Anne Boden, Starling Bank, Rhydian Lewis, Ratesetter Giovanni Daprà, Moneyfarm)
Implementing AI in Financial Services: Case Study (Francesco Brenna, IBM, Roberto Mancone, Deutsche Bank)
How Big Banks Are Approaching the New Connected World (Gilad Amir, Lloyds Banking Group, Benoit Legrand, ING, Raman Bhatia, HSBC, Gustavo Vinacua, BBVA)
Renaud Laplanche of Upgrade talking about Online Lending 2.0 and the state of the US fintech market.

Discount Pricing to LendIt Europe 2017 Ends Tomorrow

Summer pricing of £1,295 ends at midnight on September 8th. After that, ticket prices will rise to £1,495. As always Lend Academy readers can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout.

You can register now on the LendIt website.

Below is a video with some highlights from our event last year that was at the same location. We hope to see you at LendIt Europe 2017 in October.

The World is Paying Attention

Bo Brustkern, Chairman & co-founder of LendIt China shares his experience from the LendIt China Tour and Land Di Fintech Conference

July 21, 2017 By Bo Brustkern Leave a Comment

On July 15-16, 2017 we hosted the annual Lang Di Fintech conference. Lang Di is the largest and most prestigious fintech event in China, and it is one of LendIt’s cornerstones, including our USA and European conferences. For two days in Shanghai, the world’s fintech leaders gather for a truly unique conference experience, networking and peer sharing.

Leading up to Lang Di, we led a weeklong tour of China – to Macau, Hong Kong, Beijing and Shanghai – with an elite group of executives from all over the world. On Tour and at Lang Di we gained keen insights, planted and cultivated the seeds of business development, and developed a strong bond among each other and many of our Chinese hosts.

What follows are some of the observations I made while there.

Billions

In China there are more than a billion consumers that are generally underserved across a broad spectrum of financial services, making for a diverse and exciting array of opportunities to address. Yet China is dominated by giants – institutions like Bank of China and technology firms like Alibaba –companies that have tens of thousands of employees and hundreds of millions of customers. The scale of the opportunity is enormous, and so is the size of the companies trying to address it.

This is not to say that small businesses cannot survive. In the much-anticipated comments of Mr Sun Guofeng of the People’s Bank of China (PBoC), the standing-room only audience heard a clear message that the government wishes to provide an umbrella of support to the emerging Chinese fintechs. Many of my Chinese colleagues were simply elated to hear the remarks of Mr Sun. It was a brilliant speech. Brilliant. Why? He pronounced a message and a mission: first, that China is a fintech leader, second that China must lead the world, and third that challenger fintechs were important players in the plan.

Consumer protection is important (do you hear the rattling of the sabre?) but at the same time, we want to keep the good among us (do you see the passing of the olive branch?). The PBoC wishes to harmonize and rationalize the regulations, and allow for the convergence of fintechs and banks. While the focus may be on the “national champions,” the PBoC won’t let them choke out the upstarts. In essence, the government of China is placing a protective order around innovation and entrepreneurship. If this sounds strange or surprising to you, it’s time to get beyond the headlines and visit China to see for yourself what’s really going on there: a massive onslaught of entrepreneurship the world has not witnessed since the post-war American boom.

An American in Shanghai

The six-term senator from Montana, former Chairman of the Senate Finance Committee and former Ambassador to China, Max Baucus, gave a charged speech on his views of Sino-American collaboration in the new world of Ethereum, Alipay, IBM Watson and Amazon Web Services. “The living standards of our children and grandchildren depend on us getting along,” he said. With $60 billion in trade between the countries, more than 2 million travel visas and 300,000 student visas issued each year, our countries are irreversibly intertwined. It is essential that the citizens of our countries understand and respect each other, and enjoy the benefits of working together.

Ambassador Baucus praised China for its energy, enthusiasm and pragmatic spirit. China is leapfrogging US payment systems with Alipay and WeChat Pay, two mobile-only QR-based payment systems that have seen rapid, massive adoption and will soon render cities and villages all across China cashless and cardless.

American companies who do best in China spend a lot of time here, said Baucus. His one word of advice: “just go.” Get out the door, get to China, and meet your counterparts. It’s important for America, and it’s important for you. Sure, it may be intimidating to huck yourself over the border, but personal relationships are critical to the Chinese. They will respect you for trying, so long as you approach them with an empty cup.

[Read more…]

Lending Club and Prosper Tax Information for 2017

We help clarify the forms you will receive if you invest in Lending Club or Prosper loans and also discuss the tax efficiency of investing in p2p lending.

March 21, 2017 By Ryan Lichtenwald 12 Comments

[Disclaimer: I am not an accountant nor am I qualified to provide tax advice. This post 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.]

Every year we share what investors can expect when filing their taxes if they invested in Lending Club or Prosper loans. Below I share some helpful tax resources from each company, my account performance from 2016 and the tax inefficiency investing through a taxable account.

Filing Taxes on Lending Club Loans

Similar to last year, Lending Club has made the process easy if you use TurboTax to file your taxes. They have dedicated part of the help section of their website to outline the step by step process of how to accomplish the import. If you’re not a TurboTax customer, Lending Club has provided a 2016 update to their Tax Guide for Retail Investors. Your tax documents for 2016 can be found under the “Statements” section of your account under tax statements. The consolidated PDF you receive will include various sections as outlined below depending on your account. Most investors will receive just a 1099-OID and 1099-B unless you sold notes on the secondary market. For investors who started investing in late 2016 it is possible you won’t have any losses which means you won’t receive a 1099-B for recoveries and proceeds from charged-off loans.

In my case I received a 1099-OID and 1099-B. My 1099-OID shown below shows the interest I received from Lending Club notes.

My 1099-B shows proceeds of $151.17. This is the total amount of proceeds I received from charged off loans. The “Cost or Other Basis” is the cost basis for the loans that have charged off. If you take any proceeds and subtract it from the basis you calculate the losses which is broken down by loan in the tax statement and also totaled at the bottom. In my case I had $366.62 short term losses and $980.52 long term losses totaling $1,347.14 in total losses for the year. [Read more…]

LendIt Partners with 500 Startups for PitchIt @ LendIt USA 2017

500 Startups will be working with the LendIt team to produce PitchIt, the annual fintech startup competition.

December 15, 2016 By Ryan Lichtenwald Leave a Comment

LendIt has also always sought to feature fintech startups. Our first ever PitchIt @ LendIt was held at LendIt USA 2015 and since then we’ve brought the competition to both LendIt China and LendIt Europe in 2016. LendIt USA 2017 will mark the third year of our USA startup competition and we are very excited to announce our partnership with 500 Startups.

For those who are not aware of 500 Startups, they are a global venture capital seed fund headquartered in Silicon Valley. They have over $270 million in assets under management and have invested in over 1,500 technology startups since 2010. They have made over 150 investments in fintech companies in more than 20 countries. Because of their immense expertise and track record, they are a perfect partner for PitchIt.

We expect 2017 will be our biggest competition yet with hundreds of companies vying for a spot to pitch to the top VCs. Here is what Jason Jones, Co-Founder of LendIt had to say:

Innovation has never been more important for the Financial Services industry. PitchIt gives startups with fresh, important new ideas a valuable chance to build and grow their firms. Even as the fintech industry matures, we are seeing exciting areas of breakout opportunities which we look forward to discussing and experiencing at LendIt USA 2017. We are honored to partner with 500 Startups, a brand synonymous with global innovation and the startup culture, to grow PitchIt and help fuel innovation in fintech.

To apply to PitchIt 2017, firms must meet the following criteria:

Must be a fintech company
Two or more full-time co-founders/employees
Maximum of 10 full-time employees
Less than 3 years in business (companies founded before 2014 not eligible)
Raised less than 4 million USD since launch date
Must have a professional business website
Everyone registering on behalf of a specific company must have an email with that company’s domain

Shortlisted companies will receive coaching from 500 Startups along with industry leaders. The eight finalists selected will receive free passes to LendIt USA, up to $1,000 for travel to PitchIt and 50% off Startup Zone booths. The winner will also receive a Bronze sponsorship at next year’s LendIt event.

Startups can apply for PitchIt @ LendIt starting today on the LendIt website.