December 13, 2014
Lending Club, a peer-to-peer loan specialist, recently witnessed a 55% bump in its stock price on market debut. The company has now achieved a valuation of around $9B. This is more than what the company had expected during its IPO. Founded in 2007, Lending Club provides an online forum to bring together lenders and borrowers. Struggling through some regulatory issues in initial stages, the company has now facilitated more than $6B in loans.
The surge in the stock price of Lending Club saw the stock closing at $23.43. This recent IPO by Lending Club shows a fast-growing P2P market where companies are trying to establish themselves as viable alternatives to traditional lenders. The financial lending space will witness IPOs from other players like OnDeck and SoFi as well.
The fascinating thing to be noted here is the return on investment that investors have received. As highlighted by Silicon Valley Business Journal, an investor had invested in the company stock at 19 cents a share. Compared to the current stock price of $23.43, this is 120 times return. Another investor, who took part in the Series A round of the company’s funding, had invested at 27 cents a share. This is 87 times return.
The success story for investors doesn’t end here. Norwest, Canaan and Amidzad Partners, almost there of whom invested in the first round, are getting around 80 times return on their investments. Morgenthaler, Bay Partners, Norwest and Canaan, who invested in the Series B round, are getting around 120 times return on investment. Series C investors, including Foundation Capital, who invested at 39 cents a share are getting around 60 times return. Google had also invested $125M in the company with an 8% stake and is now getting around 6 times return.
Northwest Venture Partners, the biggest stakeholder with a 16.3% stake, now has a $1.4 billion stake based on current valuation. Other big stakeholders including Canaan Partners (15.7% stake) & Foundation Capital (12.7% stake) have raked in more than a billion dollars. High Profile board members like founder Renaud Laplanche (with 14.9M shares), Lawrence Summers (with 1M shares) and John Mack (with 2.4M shares) are pocketing $223.5M, $15M and $37.5M respectively.
Here is an illustration highlighting the high-value returns Lending Club gave to its investors:
It’s astonishing to see that a single P2P lending company has given such massive returns to its investors. The lending industry will certainly see a bright future with the sector now becoming more attractive for investors.