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#TrustBuddy: #LendingClub grows fast ahead of IPO

www.siliconbeat.com reports that Lending Club, an online lending marketplace that connects borrowers with investors, announced Tuesday that it had brokered more than $1 billion in loans during the second quarter this year.

The total amount of loans processed during the three month period is a record, and puts Lending Club’s total loan count at $5 billion. That means, from April through June, Lending Club brokered 20 percent of its total loans since the website started doling out cash in 2007.

Similar to TrustBuddy, which is listed on the stock market in Sweden, the Lending Club functions as an online marketplace, connecting borrowers whose creditworthiness it evaluates with investors who decide whether a particular borrower is worth their risk, rather than making loans directly, as a bank does.

The investor, who might be a financial institution or simply an individual, then has a connection with the borrower, lending the money and receiving payments through the Lending Club. The company offers personal loans from $1,000 to $35,000, and small business loans up to $100,000, according to the company’s financial filings; the typical loan size is $13,625.

We believe we can make the system more cost efficient, more transparent and more customer friendly, and are committed to offering cost-efficient products that help people achieve their financial goals,” said Lending Club founder and CEO Renaud Laplanche.

Since 2007, the company has more than doubled its loan volume each year. San Francisco-based Prosper Marketplace, which launched about the same time as Lending Club but pivoted and had a change of management last year, has brokered about $1 billion.

Lending Club has begun the process of going public, and is has tapped banks including Morgan Stanley and Goldman Sachs Group to work on an initial public offering later this year. The company’s IPO  is expected to bring national attention and more credibility to the fledgling online loan marketplace sector, which also includes Prosper and Palo Alto-based Upstart.

Some critics, however, say Lending Club overstates returns for investors and some loans come with interest rates that exceed 20 percent, more than many credit cards.

In a recent interview with the Mercury News, Laplanche said the IPO was not necessary for the company to raise money. Company profits in 2013 were $7.3 million, according to financial filings, and its revenue was $98 million, three times its earnings in 2012 and nearly eight times revenue in 2011.

We don’t need additional credit, so when we think about going public, it’s more about raising awareness and also giving an opportunity for the customers to be owners of the company and have a stake in the company,” he said.

It will be interesting to see the final valuation of Lending Club’s IPO in relation to TrustBuddy, which today is the only listed P2P lender in the world.

Nordic Investor

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