In 2006, Lending Club embarked on a new adventure with the matching of lenders and borrowers though and online platform, which started on rocky ground, yet has transcended into a $8.6B operating company following a successful Initial Public Offering, reaching 65% premium over issue price.
Image, alternative banking, online partners, lenders and borrowers. What started as a solely peer-to-peer model has reached into the various forms of institutional investors. The emerging space is evolving into marketplace lending.
The market reaching $1-Trillion, as projected by Foundation Capital, in available lending possibilities is only being scratched with the numerous players from unsecured lending, student loans, business loans, mortgages and the advancing area of automotive secured lending.
The marketplace offers access to funds. The marketplace offers high rates of returns for the peer-investors. The marketplace is evolving the landscape of non-banking companies emerging and operating in the space. With second place, Prosper Marketplace, followed by OnDeck, SoFi, Funding Circle, and many others operating in Canada, United Kingdom, Australia, New Zealand, and China.
Early investors in Lending Club varied with returns from 9x investment to well over 300x investment, a well done investment. The vision of peer to peer lending, or as now emerging marketplace lending is opening up opportunity for the community, mothers, fathers, brothers, sisters, business owners, students, and others to gain access to capital and loans at competitive rates from people within their community, avoiding the traditional bank.
What makes peer to peer work is transparency and honest communication with lenders and borrowers, and effective platform and guidelines for ease of use. The use of marketplace lending in the unsecured space is effective as well emerging secured marketplace lending will continue to make the industry grow. As of the end of 2014, the total capacity of marketplace lending, compared to the available need is only 3.5% of the $1-trillion available marketplace.
Success in the marketplace is a balance between retail investors and the institutional investors and high net-worth individuals. Offering retail investors access to a higher rate of return not offered to them in other forms of investing, baring higher risk – marketplace lending will grow exponentially with all successful emerging players.
Congratulations to Lending Club, the leader, and trend setter for the rest of us to follow. With continued vision and efforts the available choices.
Let’s welcome this innovative and public company, and thank them. All that follow will continue to add to the overall success and profitability of the marketplace. Next up, OnDeck, and Prosper……Well done! Great future ahead.
Jeff is President & CEO of Beze Ventures, holding company for Driven Capital LLC and Harbor Credit Marketing LLC, and shares equity partnership with firms to advance our value added business services. Extensive management within auto industry serving business manager, finance manager and sales manager to a number of franchise auto dealerships in three states.