The peer-to-peer (P2P) Lending Club has sold a minority stake in its crowd sourced consumer and business loans online platform to Google for US$125m, sparking speculation that an initial public offering (IPO) could be held later this year.
Existing investor, Foundation Capital, has also upped its stake in the P2P lender and the deal values the firm at $1.55bn, according to the ‘New York Times’. A $15m funding round was only held last summer with venture capital and other interested investors now sitting on a healthy profit if the firm does go to market later this year.
According to Google's vice president of corporate development, David Lawee, who will take an observer seat on the Lending Club board, the firm is "using the Internet to reshape the financial system and profoundly transform the way people think of credit and investment. We are excited to be a part of it.”
Launched in 2007, Lending Club is merely an online forum where registered borrowers and lenders can thrash out the terms of a loan deal to finance home improvement, business growth, start-ups or whatever is deemed feasible. It is used by consumers and businesses’ seeking funds alike, with the latter market particularly growing recently due to the scarcity of funding for small corporates and entrepreneurs.
Prosper and Zopa, in the UK, are its primary rivals in the P2P crowd sourced online funding market. All of these newcomers are now being forced to register with the appropriate national regulators as they continue to attract more and more money. Lending Club alone has now facilitated more than US$1.65bn in loans, with $350m passing over its platform in the last quarter. Indeed, the UK government is now looking to the sector to help it funnel much needed money to small businesses to encourage economic growth, bypassing the banks that are failing to do the job.
US rival Prosper raised $20m in funding itself at the start of the year and appointed Stephan Vermut as its new chief executive officer (CEO), hoping to take advantage of his experience at Wells Fargo as it targets growth.