Renaud Laplanche, Mary Meeker, Jeffrey Taylor
San Francisco-based Lending Club, the leading platform for investing in and obtaining personal loans, recently announced that it has enabled more than $1 billion in personal loans.
“The platform has now reached a scale and stability that makes it even more attractive to borrowers and investors,” said Lending Club CEO Renaud Laplanche. “Larger commitments from a wider base of investors mean a faster funding process for qualified borrowers, and higher loan volumes mean more choices for investors and more efficient pricing overall.”
The announcement was made at a private event in the Bloomberg headquarters in San Francisco attended by industry leaders and investors. Among them was Mary Meeker, investment partner in digital for Kleiner Perkins Caufield Byers.
Jennifer Schaeffer, Bryan Esterly – Allison Speer, Eleanor Prezant, Ching Huong
After Renaud Laplanche pointed out that Lending Club had generated positive cash flow for the preceding quarter, Mary Meeker took the stage and explained why KPCB placed a $15 million equity investment in the company earlier in the year. She explained that when you can find a big market, a good product, a good business proposition, rapid growth and a great team, it usually makes for a pretty good investment. And that’s what she found in Lending Club.
“One of the things that we think about when we make an investment is ‘What’s the big idea?’ And the big idea for this company is you want to have a big market. And an $11 trillion dollar consumer loan market, plus a $2 trillion dollar consumer credit card market that’s prime for disruption, qualifies as a big market. In fact, one of the largest ones,” she said.
“The second thing is a strong product. And Lending Club is clearly the leader in this space. It has earned that through a fair amount of time in creating a great product. It offers great returns for investors and also great rates for borrowers. It also has a very compelling business proposition — one of the best ones you could ever have. Both sides win. Borrowers win and lenders win.”
“And the third thing is very rapid growth. More than $1 billion in personal loans. It’s now issuing $200 million in loans per quarter, up from $400 million and $70 million one year ago. And the last thing is Renaud and the team have a great group of carefully chosen industry vets and also forward thinkers.”
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Meeker took the opportunity to discuss overall trends in the digital space “One of the things we are blown away by is that so many things are being re-imagined,” she said, singling out companies like Path, One Kings Lane, Flipboard, Paper by FiftyThree, and others. “My favorite app — the first app I go to every morning — is the Bloomberg app on my iPad.”
She sees personal borrowing and lending as one of the areas that is being re-imagined. “It wasn’t that long ago that you needed to go into a bank and possibly be rejected. Fill out a paper application. It took a fairly long amount of time. For retail investors, there wasn’t an ability to actually lend to these pretty compelling borrowers. Now, you can do things online 24/7 in your pajamas or whatever the case may be. And investors have certainly had the ability to get outsized returns on some very, very high quality loans.”
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Part of Lending Club’s success has been fueled by borrowers looking for lower rates. More than 72 percent of borrowers on the platform report using their personal loans to pay off existing credit card balances. And by focusing on high-credit-quality borrowers, Lending Club’s platform has generated 21 consecutive quarters of positive returns.
“We’re certainly happy so far,” Meeker said. “And hopefully we will continue to be.”
Howard Freedland, Annie Freedland, Renaud Laplanche, Alex Turkeltaub
Tags: Alex Turkeltaub, Annie Freedland, Bryan Esterly, Doug Gouraly, Howard Freedland, Jeff Bogan, Jeffrey Taylor, Jennifer Schaeffer, Kleiner Perkins Caufield Byers, KPCB, Laura Slezinger, Lending Club, Mac McCall, Mary Meeker, Renaud Laplanche, Tobias Jordan, William Brady