The spartan home page on Virgin Money’s web site reads: “Everyone’s better off with simplicity in a complex world”. This is apparently the strategy Virgin Money is pursuing with their American business, as they seem to have dropped their loan servicing, student loan, direct mortgage, and mortgage licensing products from the site entirely.
Before Richard Branson decided that P2P loans were the cola of the new millennium, Asheesh Advani was an entrepreneur who wanted to make it easier for people to borrow money from their friends and family. After a stint at the World Bank, he wondered if he could improve direct lending between individuals, and launched CircleLending in 2001. Just six years later in 2007, CircleLending was purchased by the Virgin Group and named Virgin Money; Richard Branson wore a t-shirt that said “Go Fund Yourself” to the launch party in Boston.
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.