P2P Lending News

American P2P lending service Prosper announced on their blog today that they had received a new round of “investment” from Nigel Morris of QED Investors, the founder of CapitalOne. This investment is much different than the previous $40 million in equity financing that the P2P lender has taken in the past, since this is a 1-year, 15% loan.

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Earlier this week we noticed a funding announcement via Twitter from Luc Hardy of Sagax, assuming he was the VC responsible. According to the press release made public today, Lending Club has raised a $12 million Series B round led by Morgenthaler Ventures. Rebecca Lynn, a Morgenthaler Principal, will be joining Lending Club’s board of directors. Norwest Venture Partners and Canaan Partners, who have funded Lending Club in the past, also participated in this round.

Lending Club also announced that Pamela Kramer would be joining as CMO. Kramer was most recently CMO for MarketTools (where she still appears on the Leadership Team page), and had been the CMO of E*TRADE FINANCIAL for 8 years prior.

I couldn’t help but notice a tweet from LucHardy, president of Sagax, a venture capital firm, saying “We’ve just raised another $12M at LendingClub – Bravo team!”.

Clicking on the “View tweet” link leads to a “That page doesn’t exist” error, which leads me to believe that Luc pulled his tweet when he realized that the internet (and especially Twitter) is a bad place to announce things like funding rounds.

If the funding announcement is indeed forthcoming (from a non-Twitter source), this confirms my suspicion just last week that Lending Club is running a little low on funds after their recent lending binge. On top of Lending Club’s previous fundraising of $16.4 million, A $12 million round would bring the total raised to $28.4 million.

Update: Lending Club Makes $12M Series B Official

In their latest prospectus filed with the SEC before relaunching their site, Lending Club revealed that they have received $4.1 million in new funding, apparently from Canaan Partners and Norwest Venture Partners, the same venture capital firms that provided Lending Club’s $10.2 million Series A.

From the “Risks related to Lending Club and the Lending Club platform” section of the prospectus dated Oct 13, 2008:

To strengthen our financial position, on September 29, 2008, we completed a $4.1 million equity financing round, and $1.0 million of our convertible notes were converted into equity.

Although the prospectus is somewhat vague on how this all went down, it states that 9.6M shares were sold during in Aug 2007, and an additional 3.8M shares were sold in Sep 2008. It then lists the participants in those financings, showing Norwest and Canaan each with about 6.9M shares, all at $1.065 per share.

Lending Club hints at further financing in the “Management’s discussion and analysis of financial condition and results of operations” section:

Going forward, we expect to complete an additional round of equity financing in 2009. We expect to continue raising smaller rounds of debt and convertible debt financing in the meantime.

This brings the total funding raised at Lending Club to $16.4 million.

On August 23, LendingClub announced that they were about to close a Series A round of funding for $10.2 million from Norwest Venture Partners and Canaan Partners. This first round of venture capital follows a $2 million round of angel investments to date.

Along with the funding, LendingClub announced that Jeff Crowe (Norwest Venture Partners) and Dan Ciporin (Canaan Partners, former CEO of Shopping.com) would be joining LendingClub’s board of directors.

To date, LendingClub’s growth has been slower than the other major US P2P lending firm, Prosper. In the approximately 3 months since launch, LendingClub has facilitated more than $750,000 in loans between individuals. In the first 3 months since their launch in Feb 2006, Prosper had arranged $3.4 million in loans between individuals. As of today, Prosper lenders have funded over $84 million in loans.

LendingClub has a long road ahead of it, and is relying on Facebook and other social networks (college alumni groups, employers, unions) to provide that elusive combination of community, accountability, and privacy that every P2P lender is looking for.

Today, P2P lending marketplace Prosper announced an additional $20 million in financing from DAG Ventures and Meritech Capital Partners. This is Prosper’s third round of funding, and brings the total in venture capital raised by the company to $40 million.

This makes Prosper the most heavily-financed P2P lending site in the world, pulling ahead of Zopa, who was the previous leader at $34 million after theyannounced a third round of $13 million back in March.

Meritech describes itself on its web site as “a leading provider of late-stage venture capital”, and goes on to boast expertise in, among other things, “IPO market timing”. DAG Ventures is less specific about their objectives.

Also included in Prosper’s announcement was an updated membership count of 330,000, and a total amount of loans funded of $70 million.