Virgin USA acquires CircleLending, enters US banking market
CircleLending, the Massachusets-based facilitator of P2P loans, announced on May 15 that Virgin USA, the North American investment arm of Virgin (the UK-based Richard Branson company) had acquired a majority stake. Terms of the transaction were not disclosed.
CircleLending hasn’t been included in the discussion here in the past because, although they do facilitate loans between people, they only facilitate loans between people who already know each other… how droll. In August 2006, they raised a $10 million B round of venture capital from Venrock Associates, Intel Capital, and Omidyar network (who has also participated in funding Prosper).
This acquisition by Virgin can be seen two ways. First, it could just be an opportunity for Virgin, who runs Virgin Money in other countries, to get a foothold with an established (yet small and malleable) financial services firm in the US so that they can start offering their own products. Or second, it could be seen as validation of CircleLending’s model and Virgin’s desire to infuse some capital and marketing and make P2P lending a profitable business in the US.
I take a cynical view of this acquisition (i.e., option 1), and suspect that Virgin will keep the P2P loans bit as a side business, but otherwise just open a US version of Virgin Money. Virgin Money is described on the Virgin corporate site as “Awesome credit cards, no nonsense loans, switched on savings… and then some. Sweet.” We’ll see if that type of brand appeals to Americans, which I imagine will start in the Boston area, where CircleLending is based. They might want to change that “Sweet” to “Wicked pissa,” though.