Tomorrow Lending Club will announce that is has received $10.26 million in Series A funding led by Canaan Partners and Norwest Venture Partners. Since its launch three months ago, nearly $1 million in loans have traded hands on the peer to peer loan marketplace. According to TechCrunch, Jeff Crowe and Dan Ciporin (former CEO of Shopping.com) are also joining Lending Club's board of directors.Rex Dixon, director of social media content, says Lending Club will use this money to expand beyond the Facebook platform. GigaOM also writes about the Facebook connection, "It may turn out to be a new way of proving your model: Launch an application on the Facebook Platform, see if it works, and if it does, take your hard data to a group of VCs and raise capital to grow your business." As I wrote about in an earlier post, I think the Lending Club/Facebook association is overblown. The technical challenges of moving from Lending Club to a broader audience seem very small and would probably cost little money. I would have to guess that Lending Club plans to launch a significant marketing campaign with the funds and hire more people.
The peer to peer lending market is hot right now. In June Prosper secured an additional $20 million in venture captial (for a total of $40 million) and will expand to Japan. Globefunder has raised 1.5 million in seed capital and Loanio is expected to launch this fall.
Update: Lending Club has now announced the VC on their blog. According to their CEO, Renaud Laplanche, "Facebook now has over 6 million active user groups which are prime targets for financial services. However, Facebook users are younger than the average online population, and our strict screening criteria (640 minimum credit score, less than 20% DTI) led us to decline about 75% of all applications, as younger borrowers tend to have a lower FICO score. We are coming up with new tools to help the “declined” borrowers understand the importance of good credit and take specific actions to improve their credit score. We will be using the funds to expand beyond our current Facebook application."
