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When Lending Club first went online in 2007 it is unlikely that many expected that it would have loaned more that $5 billion dollars within seven years or that it would be going public in that same time frame. $1.8 billion of that total was raised in the first six months of 2014. The company has not announced a filing date or selected a stock symbol yet, but we do know that it is expecting to raised up to $500 million, an amount that may yet be adjusted upwards. Speculation is that the IPO will take place before the end of November this year.
Originated as a strictly peer-to-peer platform, the company has now developed relationships with other more traditional institutions to help create a broader and potentially more effective strategy. Founder and CEO Renaud Laplanche’s strategy of replacing “the traditional banking system with the low-cost marketplace” can be enhanced, “When you [combine] the low cost of capital of the banks and great service of Lending Club. Having banks relinquish their customer relationships and becoming investors on the platform is a good way to transform the banking system.”
Earlier this year Laplanche explained the company’s vision: “We want to transform the banking system into a marketplace that is more competitive, more consumer-friendly, more transparent.” Can a get an “Amen to that?”
The founding of the company in 2007 was visionary, if not fortuitous, in light of the sub-prime lending disaster that eventually unfolded in 2008 and 2009 and led to the further revelations of underlying corruption in the traditional, institutional banking system. Those subsequent events provided the ideal environment in which Lending Club and other peer-to-peer lenders could prosper. Lending Club expects to carve out for itself a healthy portion of the $3.2 trillion dollar consumer credit market. The company estimates that about $380 billion is within its range, based on its borrower qualification protocols.
Expect the IPO to walk Lending Club right up to the door for international expansion, and that should be good news for Brits, but not so much for U.K. bankers. Speaking of which, Lending Club recently acquired Springstone Financial, a specialist in medical and educational lending. Springstone has 34 million customers, yet spent only $121,000 on losses due to fraud in 2013. Just saying.
Lending Club typically shows up on CNBC’s Top 50 Disrupter List, along with others like project-funder Kickstarter and Elon Musk’s SpaceX. It was number five on Forbes Top 25 Most Promising Companies in 2014, one of Fast Company’s Top 10 Most Innovative Companies in 2013 and won the World Economic Forum’s 2012 Technology Pioneer Award, whilst Mr. Laplanche earned the Ernst & Young Entrepreneur of the Year Award in 2013.
Lending Club revenue growth and timeline
