A way out of the mortgage mess?
(This is a question, not a statement. And, yeah, $10.6M isn't even a drop in the bucket compared to what's needed.)
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Lending Club raises $10.26 for social lending — joins crowded field
By Matt Marshall 08.22.07
Lending Club, the Sunnyvale, Calif. lending service where people borrow and lend money among each other, bypassing the banks, and theoretically getting better rates, said it has raised $10.26 million in a first round of financing.
Canaan Partners and Norwest Venture Partners made the investment.
The deal makes the the social lending industry very crowded, and the funding is a large amount for such a young company with little track record — especially when there’s so much competition (see our coverage). Prosper and Zopa both do something similar, and have raised much more cash. CircleLending, Wonga and GlobeFunder are other players (see coverage here).
However, Lending Club was first to build an application on Facebook, which it says has more than 13,000 Facebook users. It says $750,000 in loans have been made. It wants to use the money to expand beyond Facebook.
Lending Club’s investors say the market is still in its earliest stages: “The multi-billion dollar consumer lending market is just beginning to leverage the power of social networks,” said Dan Ciporin, a venture partner at Canaan.”
Lending Club is available to individual borrowers with credit scores at or above 640. Using Lending Club, borrowers can apply for personal loans of $500 to $25,000 to be funded by individual lenders. To date, lenders have funded 80 percent of all loan requests, the company says.
The company says it uses pre-set criteria such as credit worthiness, being friends on Facebook, sharing network affiliations, belonging to the same groups or by geographical location.
Tom 08.23.07 | 5:37 am
The field is not really that crowded. Zopa is not available in the US yet. Wonga and Globefunder are not live yet. Loanio is not live yet. Circlelending is not really the same thing - it’s just loans between people that already know each other. Right now there are only two competitors - Lending Club and Prosper. The barrier to entry (lending laws) seems to be so huge that it takes a very long time for any P2P lending company to launch.
Rex Dixon 08.23.07 | 9:31 am
@TOM - you are correct, we at Lending Club just was approved by the state of Arizona recently, and Michigan is around the corner soon. So yes, you have a bunch of paperwork to get approval in the USA.
One of our main comments early on was Canada. Many facebook’r’s are from there. They were disappointed that we could not provide service to them. There is a company launching soon for Canada btw.
Rex Dixon
Director of Social Media Content
Lending Club
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We’ll see you live in early October. Thank you for covering us.
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