How You Can Invest in Equity of a New UK P2P Lending Startup – Provided You Act Quickly

In December 2013 I saw the pitch of a promising pre-launch UK p2p lending startup called Landbay pitching on the UK p2p equity platform Seedrs to the crowd. The pitch explained how they planned to do p2p lending secured by property in the UK. I liked the proposal and invested a small amount in Landbay shares.

Since then the founders John Goodall and Gray Stern have been busy. They launched the site in public beta, succeeded in winning former Zopa co-founder James Alexander for their advisory board and managed to get featured on Techcrunch.

They also kept investors updated about their progress. A few days ago I got a 21 page report about the current state and future plans.

Now Landbay is raising a second round from the crowd

Landbay raised capital in a few hours on the weekend in a second SEIS eligible round on Seedrs from the existing shareholders. Landbay raised 81,647 GBP for a 6% equity stake. That’s a valuation of 1.28M GBP (up from 0.62M GBP in first round). To avoid dilution investors from the first round had the right to invest into this new round first.

Now there is a 2.96% equity round – EIS eligible – aiming to raise 41,456 GBP (1.36M valuation).

If you are interested you don’t need to be a UK resident. Just sign up at Seedrs and follow the process. If you are outside of the UK, I recommend using Transferwise, when depositing money in order to reduce currency transfer fees significantly. I think this round will close within days, maybe even hours, so if you are interested you need to be quick.

This article is not an investment advice. Investing in startups bears significant risks, including total loss of investment.

Funding Circle Runs Whole Loans Trial

Funding Circle announced that starting May 1st they will do a one month trial offering randomly selected loans as ‘whole loans’ to selected institutional investors on a first come first served basis.

Announcement:

It’s been a fantastic start to the year at Funding Circle. The announcement of additional funding by the Government-backed British Business Bank and the introduction of regulation by the FCA helped to drive a record quarter of lending, with more than £53 million lent to small businesses across the UK – more than two and a half times the amount during the same period of 2013.

At Funding Circle our goal is to build a better financial world by helping as many businesses as possible to access finance, and investors to earn attractive returns.

Over the last few months you will have seen an increase in lending opportunities with record levels of demand from businesses across the UK. Within the next 12 months we expect demand to increase substantially, and our aim over the next few years is to grow to become a significant part of the small business lending market. In the UK, this is an estimated £7.5bn per month market.

To achieve this we want to ensure we have a diverse range of investors at Funding Circle. More investors helps us to attract more businesses, as we have seen from the Government’s involvement. This helps to deliver more lending opportunities for everyone and ensures long-term stability and sustainability for the Funding Circle marketplace.

As you will probably be aware, we have mentioned before that there is a lot of interest from organisations, such as pension funds, insurance companies, family offices and hedge funds, to join Funding Circle to lend.

We have been considering the best way to introduce these new types of investors to the marketplace in a way that is sustainable and also protects the experience of individual investors.

As part of our considerations we have closely followed the developments of the US peer-to-peer lending market over the last 18 months, where larger investors have purchased whole loans rather than lots of individual loan parts. This has shown to us that introducing the ability for investors to buy whole loans is a successful way of creating more lending opportunities for everyone, whilst also protecting individual investors’ Funding Circle experience.

Today we’re announcing that from early May we will be starting a one month ‘whole loans’ trial with a small group of non-bank financial institutions who will lend up to £3m in total. These whole loans will be purchased in full and it will not be possible for individual loan parts to be purchased, as is the case with the ‘partial loans’ that are listed today.

Initially, this will be a closed trial and last for one month beginning 1st May. During the trial whole loans will not be visible on the marketplace; however we will continue to publish details of every loan in our loan book and clearly indicate whether a loan is a whole loan or a partial loan.

While we anticipate most investors will continue to prefer lending on partial loans, once the trial has been successfully completed we will make whole loans available to any interested investors. You can register your interest after the trial by contacting us …

Lending Club Buys Springstone Financial

Lending Club announced today that it has acquired Springstone Financial for a total consideration of 140 million US$ in cash and stock. Springstone provides financing options for consumers looking to finance private education and elective medical procedures through a network of over 14,000 schools and healthcare providers.

“The acquisition of Springstone is significantly expanding the services we offer to help consumers achieve their goals,” said Lending Club CEO Renaud Laplanche. “Parents looking to finance their children’s education and patients undergoing elective procedures will now have access to Lending Club loans and benefit from responsible, transparent and affordable financing options.”

Mike Gilroy, CEO of Springstone, said, “Lending Club has established a great reputation as an innovator. We’ve built strong bridges between providers and patients and between educational institutions and parents. We’re excited to become part of the Lending Club platform, which will bring new financing options to our network.”

As part of the financing of this transaction, Lending Club also announced the closing of an equity capital raise. Investors in the $65 million round included funds and accounts managed by T. Rowe Price Associates, Inc., Wellington Management Company, LLP, BlackRock and Sands Capital. According to Peter Renton the valuation of Lending Club at this round is at 3.76 million US$.

“We believe that Lending Club has an opportunity to transform an important part of the banking system into a transparent online marketplace,” said Henry Ellenbogen, Portfolio Manager at T. Rowe Price Associates, Inc. “The Springstone acquisition is another step in that direction, and we are very excited at the prospect of being a long term equity partner of Lending Club.”

Lending Club also raised $50 million in debt financing to fund the acquisition.

(Source: Press release)

Bondora Moves to Fixed Price Bidding Only

P2P lending service Bondora informed investors today that it plans changes to the bidding system in May. So far Bondora allows borrower to selected between ‘timed funding’ which results in a reverse auction lowering interest rates if more lenders want to bid on a loan during the auction period than the loan amount needed and ‘quick funding’ where the bidding ends, once the loan is fully filled.

In future Bondora will uniformly use ‘quick funding’ loans with fixed interest rates.

Since there will be no advantage for investors to set interest rates low on their automated investment profiles any more after the change, I expect the short term effect will be that investors raise the interest rate on their profiles to the actual interest rate they want to invest at (Currently it is possible and custom to bid 6% in order to heighten chances that bids participate in quick funding loans, which then might actually close at 28%).

Related article: P2P Lending: How are interest rates set

Ppdai Closes Series B Round

Shanghai-based p2p lending service Ppdai.com has completed series B round (rumoured to be at 45M US$). The round was led by Lightspeed China Partners, an early stage investment company. Wealth management company Noah Private Wealth Management and Sequoia Capital also invested.

Ratesetter Will Expand P2P Lending Service to Australia

Ratesetter will expand its p2p lending operations to Australia in 2014 and says this will serve as the stepping stone to further launches in Asia. It is also exploring launches in association with financial services partners closer to home in Europe.

Ratesetter has secured investment of $3 million from local and international investors to kick-start its offering from its Sydney offices.

Headed by Daniel Foggo, a former banker with Barclays Capital and NM Rothschild in Sydney and London respectively, the company says it will be the only Australian P2P company offering market-beating savings rates to individuals who lend funds on its platform and accessible loan rates to everyday borrowers who are tired of banks’ hidden fees and profiteering.

Ratesetter will go live in Australia this summer. Ratesetter says, it will be the first P2P lender in Australia to be fully regulated from the outset, allowing all Australians to participate on its  platform, not just professional investors. To make the platform available to retail investors at launch, Ratesetter has been working for a year on licensing.

Ratesetter, launched in October 2010 in the UK was also the first P2P lender to launch a ‘Provision Fund’ – the largest in the UK at 3.8 million GBP – to help protect savers’ funds in the event of a borrower default.  In March 2014, Ratesetter also originated the largest monthly inflows in the UK p2p lending sector. Since October 2010 the total p2p loan volume originated by Ratesetter has been over 208 million GBP.

Rhydian Lewis, founder and CEO of Ratesetter, said: “When looking at international markets in which to expand, Australia was the obvious choice as it bears great similarity to the UK before the advent of p2p lending. Its saving and loans industry is ripe for disruption as banks have been offering below-par deals for too long with little true competition.” Continue reading

Lendico Launch in South Africa

Today p2p lending service Lendico is launching in South Africa, the first non-European market for Lendico. The start-up is launching through Africa Internet Holdings (AIH) – an e-commerce development platform supported by Rocket Internet, Millicom International and MTN. AIH co-founder Jeremy Hodara said South Africa matches the 3 criteria Lendico looks for in new markets:

  • The country needs good financial infrastructure, with all the necessary components in place
  • There needs to be an expanding online population, with adequate Internet penetration
  • There needs to be a demand for personal loans

(Sources: Lendico, BusinessTech.co.za)

Isepankur Rebrands As Bondora – Raised 1.3M

P2P Lending marketplace Isepankur yesterday rebranded as Bondora. Bondora is active for borrowers in Estonia, Spain, Finland and Slovakia and lenders in 29 countries across Europe (all European Union countries plus Switzerland).

Following a new 1.3M Euro round of financing raised for the company, Bondora welcomes a new board to help the company in delivering an innovative business idea across the borders.

Mark Noetzold (a member of various supervisory boards and a lecturer for risk management in Germany, Switzerland and Austria), João P. S. Monteiro (an international manager responsible for global development at a blue-chip company) and Mati Otsmaa (a C-level management executive with extensive experience in consumer credit lending at American Express, Barclays, Citibank, Chase, Experian and HSBC) join forces to improve, market and raise awareness for the first cross-border peer-lending platform Bondora.

„Direct or p2p lending is the most rapidly developing financial service today and has a huge future potential by offering the best solutions to the borrowers and high returns for the lenders. I believe that Bondora, with its cross-border strategy, strong team and the ability to execute fast, has the potential to change the world of finance to be more transparent and straightforward,” – commented João P. S. Monteiro, board member and one of the angel investors.

According to an article in E24 Postimees the new investors now hold about 19% to 20% of the company shares.

„Over the last 5 years we have brought together over 70,000 customers from 29 countries to borrow and lend on our platform. The newly raised capital will be used to improve, market and raise awareness of our service further. Today we have a product, where a telephone engineer from Estonia could get funds to renovate his flat from a dozen of lenders located in any European country. Not only our borrowers get a chance to have their loans financed, but they get the best available deal on the marketplace. A secretary from Slovakia, for example, ready to pay 28% for a 600 Euro loan to study English, might end up paying only 12% because lenders pile in.  It is a simple and secure application process for the borrowers and a possibility to diversify private investment for the lenders. At the moment 26% of our lenders come from Germany, 11% from the UK and 4% from Switzerland (with the rest being spread across Europe). With the rapid growth of the company in the last year, the old name could no longer accommodate room for our cross-border growth, that is why today we are also launching our new name – Bondora, and our website available in 23 languages,” – commented the CEO of Bondora, Pärtel Tomberg. Continue reading

International P2P Lending Services – Loan Volumes March 2014 – Round Figures Crossed

March brought growth for the major p2p lending services. Ratesetter managed to pass Zopa and Funding Circle in newly originated loan volume in the UK. I added one new service to the table. Note that I have switched the reporting currency to Euro as all but two services are located in Europe. Several p2p lending services reached major figures for total loan volume funded since inception:

I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in March 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.