Internet ventures are dependant to a certain degree to new visitors that are referred to them via search engines. A visitor that did a search on a very specific search term, e.g. ‘get a personal loan’ will have a very high chance to sign up if after that search he is introduced to the Prosper or Lendingclub website. There are tools that measure how ‘visible’ a domain is on Google and other search engines providing an index chart, that allows to compare the visibility of several websites.
Prosper’s visibility index (blue line) is much higher than Lendingclub’s. Prosper.com ranks good for more and more important keywords in organic search rankings. Organic search means, that Prosper shows in a the search results at search engines that are not paid ads. But which search terms do the actually rank for? Continue reading →
Zopa has announced that it reached the milestone of 150 million GBP in loans facilitated. Zopa says the new loan volume per month accounts for between 1% and 2% of new personal loan volume made in the UK.
P2P lending service Lending Club announced yesterday that it has been selected as a World Economic Forum 2012 Technology Pioneer. Lending Club was selected from amongst hundreds of applicants from around the world that hold the promise of significantly impacting the way business and society operate.
P2P Lending service Lendingclub.com successfully raised further capital. The 24.5 million US$ series C round was led by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.
Lending Club so far raised 52.7 million US$ in total funding.
Lending Club, on which lenders have funded loans to private borrowers for a total volume of over 103 million US$ since inception, is growing fast. Currently about 10,000 loans are originated per month equaling a loan volume of about 8 to 9 million US$ per month.
The monthly volume is a multiple of that of Prosper Marketplace, the main competitor in the US peer-to-peer lending market.
Renaud Laplanche, CEO of Lending Club says “This latest investment gives us considerable resources to further develop our platform, launch new products, offer better service to our existing customers and expand our reach to a whole new set of customers.”.
(Sources: press release via TechCrunch, Lending Club Statistics, own data)
Back in January I received an email from a Lendingclub employee in reaction to this article, where I wrote:
“… Several .. p2p lending services show clear signs that default levels will (or have) surpassed the initially published percentages of defaults to be expected based on external data. … The one exception from the rule is Zopa UK, which successfully manages to keep defaults low…”.
The email questioned why Lending Club was not mentioned along Zopa for keeping defaults low and invited me to discuss this. On Jan. 21st I replied with the following (based on numbers which I compiled from Lendingclubstats.com – these will have changed slightly since then by now):
As sample let’s look at the loans Lending Club issued in Dec. 2007. Total loan amount is 1,322,850 US$.
The status of these is:
a) Current 823,800 (62,3%)
b) Fully Paid 168,150 (12,7%)
c) Late 82,500 (6,2%)
d) Defaulted 248,400 (18,8%)
These loans were approx. 2 years old (in January) and will run about 1 year more.
Is it a fair assumption that in Jan 2010 22% (or more) of the loans issued will have defaulted? I know I did not take the final step to split these numbers by credit grade, but if I would have done that, are you arguing that the default levels are low (or at least lower than the scoring predicted in Dec 2007)? If Dec. 2007 is for some reason a bad performing month, feel free to do the above with any other month from 2007 for the discussion and we continue with these numbers.
Though I was promised a detailed answer and I did follow-up several times, so far there has been no reply. I am not saying that Lending Club defaults are too high for lenders to make a profit. My points are:
Default levels at Lending Club are likely higher than initially expected
The published default rates on Lending Club and other p2p lending platforms are often averages in relation to all running loans (including recently funded ones). This figure is skewed, if the service is growing fast and lenders might misinterpret it. A better evaluation is based on taking a sample of older loans (e.g. based on one month of origination)
ROIs for Lending Club lenders will be, once their investments mature, likely lower than the average shown at the moment at the Lending Club statistic page.
Lending Club has a new graphic displays on it’s statistic page. Prominently featured are loan purpose, range of investor returns and total loans funded. Users can click on any graphic to enlage it. I found the ‘Loan details’ page more interesting then the ‘Highlights’ page, for it visualizes differences in trends depending on loan purpose.
New lenders signing up at Lending Club via this link get 25 US$ to lend.
Lendingclub.com currently runs a promotion. The 25,000th investor to register wins 2,500 US$. To be eligible a registration is enough (no purchase/investment necessary). The winner will be announced after Oct. 31st.
Lending Club lenders have invested more than 45 million US$ in loans to fellow borrowers. Not yet a Lending Club investor?
You might off by watching this presentation, which was recently webcasted by Lending Club to lenders. The 30 minute presentation lists benefits and explains the basics on how the website works.
Since it is marketing material it does show a very rosy picture on the numbers, but you can crunch all figures for yourself on Lending Club’s statistic page (e.g. change observation to loans issued from June 2007 to June 2008).
Lending Club reintroduces the possibility for everyone to download the data of the loans as .csv or .xml file. This feature was temporarily removed in March due to privacy concerns. Lending Club says a few data points that compromised borrowers identity have been removed.