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Teaching the World About Peer to Peer Lending

LendIt and Innovate Finance in the UK Teaming Up on a Fintech Webinar

Webinar will get the perspectives of leading venture capitalists on fintech opportunities in the US and the UK.

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[Update: The webinar replay is now available here.]

This Wednesday LendIt and Innovate Finance are teaming up with some the leading VCs to discuss fintech in the UK and the US. Titled, FinTech Opportunities in the UK and the US: The VC Perspective, this first of its kind webinar will bring perspectives from both sides of the Atlantic in a fast-paced one hour educational session.

I will be moderating along with Lawrence Wintermeyer, the CEO of Innovate Finance. Panelists include Matt Harris of Bain Capital Ventures, Luis Valdich of Citi Ventures, Alston Zecha of Eight Roads Ventures and Sheel Mohnot of 500 Startups. We will be discussing how the fintech environment is different in the UK and US and what these leading VCs are seeing today. We will also be talking about which areas of fintech are the hottest, what startups can do to get noticed today and much more.

Here are the details for the webinar:
Date: Wednesday, June 7
Time: 9:30am Eastern/2:30pm BST
Duration: 1 hour
Register here

Come prepared with questions, there will be some time for audience Q&A towards the end. Even if you might not be able to make it go ahead and register at the above link because a replay will be made available for all registered participants. I hope to have you on the webinar on Wednesday.

 

Own SoFi, Other Fintechs Through Renren

Renren is a social networking platform turned fintech investment firm allocating serious capital to some leading players in fintech

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Renren_fintech_investments

There are no shortage of VC firms who have allocated dollars to various fintechs throughout the world. But for individual investors it is difficult to get exposure to fintech companies because so few have actually gone public. There is one company called Renren that has allocated to numerous fintech firms and is currently publicly traded on the NYSE under symbol RENN.

The company operates a real name social networking platform in China but has most recently made investments in fintech businesses which will be the focus of this post.

Most notable investments from a US perspective include SoFi, Lending Home, Motif Investing and Fundrise. Renren has participated in SoFi’s series B, D, E and F rounds for a total investment of over $242 million. According to the 2015 year end report, “The Company held 28.85% and 21.20% equity interest of SoFi as of December 31, 2014 and 2015, respectively.” While we don’t have updated numbers, Renren owns a significant interest in SoFi, which continues to buck the trends of their competitors. The below table was taken from Renren’s 2015 year end earnings report and highlights their top fintech investments.

Investment Location Cost (thousands) Ownership % Portfolio %
SoFi 1 San Francisco $235,920 21.2% 58%
Lending Home San Francisco $65,843 14.7% 16%
Motif Investing San Mateo $40,000 10% 10%
Snowball Finance 2 Beijing $35,534 n/a 9%
Credit Shop Austin, TX $15,000 n/a 4%
Fundrise 1 Wash DC $15,144 25.3% 4%
Total $407,441 100%
1 equity method investments; 2 available for-sale investments

In order to invest this amount in SoFi, the company borrowed nearly $60 million at 6% to finance the transaction. According to financial reports, the loan is expected to be repaid over three years with the potential to extend to five years if SoFi meets revenue targets. It was reported in September, 2016 that SoFi was seeking to raise an additional $500 million after their massive $1 billion Series E round in 2015. [Read more…]

What VCs Really Think of Banks

The huge depth and breadth of FinTech investments reveal the scale of disruption in financial services.

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VC Fintech highlights

[Editor’s note: This is a guest post from James Alexander, an experienced marketplace lending executive who has been following this industry for many years. See the end of this post for a more complete bio.]

In 1998 a small Internet banking site called X.com made the bold decision to focus on its payments business. A few years later—renamed PayPal—this company encompassed over 100 million active users. Today, the disruption of financial services promises to be more dramatic and far-reaching.

Financial technology (FinTech) represents nothing short of revolutionary change, encompassing payments, next generation advisors and lending. Investments into FinTech startups recently quadrupled, growing to over ~$12 billion in 2014 from ~$3 billion in 2013. It appears 2015 is on track to dwarf the previous year, according to CB Insights, which charts more than 1,300 transactions in the sector since 2008. [Read more…]

Upstart Closes a $35M Funding Round Led by Third Point Ventures

This new breed of marketplace lender is gearing up for growth as VC's continue to show strong interest in the space.

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Upstart is gearing up for growth. One of the newer marketplace lenders announced some big news today. They have closed a $35 million Series C led by Third Point Ventures. This is the largest funding round ever for the company and will provide them with the resources they need to scale. Ryan wrote a detailed investor review of Upstart a few weeks ago and we introduced them to Lend Academy readers here.

I caught up with Upstart CEO Dave Girouard earlier this week to talk about this funding round and to get an update. He told me that Upstart has been growing steadily. After launching in May last year they have issued nearly 9,000 loans totaling more than $125 million. They are up to 65 employees now and with this new round they are “doubling down on data science and engineering” according to Dave.

One of the unique things about Upstart is that they have done a lot of analysis around education – their use of the school and major of a borrower, along with traditional credit data, is an integral part of their underwriting model. But they are looking at other data sources as well.

[Read more…]

Prosper Reboots With a New CEO and New Funding

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There is some really big news out of Prosper today. They have not only received a new $20 million round of financing but there has also been a management change at the top of the company.

Interim CEO Dawn Lepore has resigned and been replaced by new CEO Stephan Vermut. Prosper has also named a separate president for the first time – that title has been held by the CEO until now. Aaron Vermut will become the president once he transitions out of his current position. Also coming on board is Ron Suber as Head of Global Institutional Sales. All three executives have worked together at Merlin Securities, a prime brokerage services firm that was acquired by Wells Fargo in July 2012.

A New Round of VC Funding Headed by Sequoia Capital

There is probably no bigger name in the Silicon Valley venture capital community than Sequoia Capital. They have funded some of the most successful names in business today including Apple, Google, Cisco, PayPal and Oracle just to name a few. Now, they will be adding Prosper to their portfolio of companies.

Sequoia Capital is leading a $20 million round that includes funding from all existing investors as well as the three new executives. Sequoia Capital Partner Pat Grady will join the Prosper Board of Directors along with new CEO Stephan Vermut. This reconstituted board was made possible after the resignations of David Silverman and Larry Cheng last month.

[Update: Prosper released their Form 8-K after I published this article and it should be pointed out that there is going to be a completely new Board of Directors. Founder Chris Larsen, Timothy Draper, Gary B. Coursey, Nigel Morris and Eric Schwartz have also resigned as members of the Board, effective January 14, 2013.]

A New Beginning for Prosper

This marks an exciting new chapter for Prosper. They will have a new look executive team that should bring some renewed vigor and energy to the company. I happen to know Ron Suber, Prosper’s new Head of Global Institutional Sales, who has been a reader of this blog for some time and we have communicated several times over the past year. In our conversation yesterday he stressed that the new management team will bring a clear vision, passion and creativity to Prosper and the p2p lending space.

They have a “100-day plan” of goals for their first hundred days and a list of nine things Prosper needs to do to reestablish itself.  Suber is also going to bring a renewed focus to the investor side of Prosper’s business particularly when it comes to institutional investors. But he has assured me that retail investors will also be a priority.

My Take on This Change

While I have known a new round of funding was coming (although I was pleasantly surprised at the size of the round) I had no idea about the management changes until my phone conversation with Ron Suber yesterday. These changes have the potential to propel Prosper forward on to a new trajectory of growth.

The one piece that has been concerning some investors is the class action lawsuit against Prosper. The suit is still ongoing and the new management team would not comment on this matter but based on the new round of funding clearly the lawyers at Sequoia Capital are not too concerned about it.

Last year Lending Club caught all the headlines for their astounding growth and high profile board nominations. No doubt they will continue to do well in 2013. But I think this year it will not be all about Lending Club. Prosper has an excellent chance to establish themselves as the strong number two in the p2p lending space.

Clearly this is a shot in the arm for Prosper at a time when they need it. I expect we will see increased volume at Prosper very soon, probably as soon as the Prosper Funding LLC changes are implemented on February 1st. I will be in regular contact with the new management team and will report back on new changes as they happen. The next few months will be very interesting.

Here is a link to the official press release announcing these changes as well as an article on Techcrunch.

Lending Club Receives $15 Million in Funding From Kleiner Perkins

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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.”

[Read more…]

Prosper Receives a New Round of Funding

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I have been out in San Francisco this week visiting with the management teams at Prosper and Lending Club. I arrived at the Prosper offices yesterday morning and was greeted by some big news. CEO Chris Larsen shared that they have just received a new round of venture capital funding.

Here are the details of this funding round. Prosper issued 8,996,739 shares of its Series F Preferred Stock to a group of new investors that includes IDG Capital Partners for an aggregate purchase price of $9.0 million. Prosper will not be issuing a press release about this funding and they have given me permission to make this announcement.

This funding was unsolicited and came at a higher valuation than the round that closed in June. It brings the total cash on their balance sheet to over $25 million and gives them even more flexibility now to ramp up operations. The mood at Prosper headquarters was understandably jubilant when Chris Larsen announced the news to employees.

I think this funding is great news not just for Prosper but for all of peer to peer lending. Their CFO stated to me yesterday that Prosper expects to reach break even in 12-18 months at somewhere around $30 million in new loans per month. This new funding should easily see them past that point even allowing for slower growth than expected.

All p2p investors benefit from having two strong and successful competitors. It certainly looks like we have that now. The future keeps looking brighter for peer to peer lending.

Lending Club Closes a New $25 Million Funding Round

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Today, Lending Club announced that they have closed their latest funding round, a Series D, to the tune of $25 million. But what is more significant about this big news is that it places a valuation on Lending Club of a whopping $275 million, up from $80 million last year.

All existing investors participated in the round as well as a new investor, Union Square Ventures, a New York based venture capital firm that have invested in the likes of Foursquare, Twitter and Kickstarter. The $25 million round brings the total raised by Lending Club now to $77.7 million.

This is an historic day for the peer to peer lending industry. A valuation of $275 million for Lending Club demonstrates that the industry is coming of age. It clearly is a vote of confidence not just in Lending Club but in the peer to peer lending concept as a whole.

The news first appeared in the Wall Street Journal this morning, there is no official press release as of right now.

[Update: Here is the official press release.]

Prosper.com Closes Next Round of VC Funding

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Today Prosper announced that they have closed another funding round, this time for $17.2 million. It came from several of their existing investors as well as from some new investors as well. Here are some of the details from the press release:

Prosper.com, a social lending marketplace that brings together creditworthy borrowers with individual and institutional investors, today announced that it has raised over $17 million in funding from new investors Draper Fisher Jurvetson and CrosslinkCapital. Existing investors Accel Partners, CompuCredit, Omidyar Network, TomorrowVentures, and Volition Capital also participated in the round.

This $17.2 million funding round is their largest cash injection to date and brings their total cash raised to $74.7 million. Based on their latest financials it was clear that Prosper needed a new cash injection soon. This new injection will give them breathing room now for at least year and probably longer. Prosper has been on a steady growth curve for the last six months and with this higher loan volume will likely be reducing their cash burn rate as they start to generate more cash from operations. [Read more…]

My First P2P Venture Capital Investment

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Last week I made a venture capital investment in a company I had never heard of until a few days before. I don’t have a massive venture fund and I didn’t invest a large sum of money. I joined with many other investors in a private security offering through MicroVentures.

MicroVentures is a new concept in peer to peer investing. It is a cross between traditional p2p investing (such as Lending Club and Prosper) and venture capital. Here you are not providing loans; you are investing capital into a business. There is no repayment plan; you own stock in the company. The only real exit plan is a sale of the company some time down the track, hopefully for a large multiple return.

The minimum investment of $2,000 is much higher than other p2p investments and you need to be approved as an investor in order to participate. But if you meet their criteria and are interested in being an angel investor you can get started for a fraction of what you would need to invest in an angel fund.

Angel Investing Made Easy

After selling my last business in 2008 I had toyed with the idea of becoming an angel investor. I love the excitement of a startup business but the amount of time and money needed to become a successful angel investor was too much for my taste. MicroVentures solves both the time and money piece for me. With low minimum investments as well as their strict due diligence before taking on a company, MicroVentures makes the entire process easier. While it would be foolish to not perform some due diligence of your own there is some comfort in the fact that MicroVentures has already done a great deal of the legwork. [Read more…]

About Lend Academy

Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.

The Lend Academy team loves peer to peer lending and our staff have all invested their own personal money in one or more of the platforms. Lend Academy Media is part of Cardinal Rose Group which also owns LendIt, the leading industry conference, and has a majority interest in NSR Invest.

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