While many private funds now exist to aggregate marketplace lending opportunities for accredited investors, only in Europe have we seen the successful launch of public vehicles providing access to non-accredited retail investors. In the United States, two public funds managed by Van Eck and River North have started down the path with the SEC, but both are startups and have not yet seen their registrations approved.
Yesterday we reviewed the N2 filing for a large private fund, the Direct Lending Income Fund, that plans to convert to a public fund of the same name. What makes Direct Lending Investments offering unique is that this is the first public filing from a company that is converting an existing fund, called a “predecessor fund” in the N2 filing, into a public fund available to non-accredited, retail investors.
Brendan Ross, who is the Founder and President started Direct Lending Investments in October 2012 and has been an investor in the industry for quite some time. Peter was an early investor in the fund and he first reviewed the Direct Lending Income Fund back in May 2013. The fund continues to be one of the top performers in his marketplace lending portfolio.
Peter and I talked to Brendan to learn more about what this means for the fund and for investors looking to access small business loans.
The Current State of Direct Lending Investments
Direct Lending Investments currently offers a fund that is open only to accredited investors. The current investment minimum is $100,000 but that will change if they are approved by the SEC to create this 40-Act fund.
The fund has historically earned investors unlevered double digit returns by investing in marketplaces like Biz2Credit, OnDeck, DealStruck, RealtyMogul, IOU Central, QuarterSpot and others. When we talked to Brendan, he said they have around $450 million in assets under management today, which makes them one of the largest funds in the online lending industry. [Read more…]