User:EFlynn at LendingClub/LC New History Draft

Source: Wikipedia, the free encyclopedia.

History

LendingClub was initially launched on

Series A funding round in August 2007, from venture capital investors Norwest Venture Partners and Canaan Partners, LendingClub was developed into a full-scale peer-to-peer lending company.[1][3]

On April 8, 2008, LendingClub temporarily suspended new lender registration and canceled its affiliate program while it awaited approval to issue

Morgenthaler Ventures.[10]

Pre-IPO growth

In April 2010, the company raised $24.5 million in a Series C funding round led by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.[11] In August 2011, LendingClub raised an additional $25 million in venture capital from Union Square Ventures and Thomvest.[12][13] This led to LendingClub earning a $275 million post-money valuation and an increase of $80 million in valuation from the preceding year.[14] Thomson Reuters founder Peter J. Thomson also invested an unspecified amount of his personal fortune into LendingClub.[15] In 2011, the company moved its headquarters from Redwood City, California to San Francisco.[16]

In 2012, LendingClub employed about 80 people, with

Kleiner Perkins Caufield & Byers and $2.5 million of personal investments from John J. Mack. Kleiner Perkins partner Mary Meeker joined Mack on LendingClub's board of directors.[19] This led to a $570 million valuation of the company.[20] In November 2012, LendingClub surpassed $1 billion in loans issued since its inception.[21]

In May 2013,

Google Capital purchased a stake in LendingClub.[20] LendingClub also began recruiting institutional investors and partnering with smaller banks in order to help streamline their small loans operations.[22][23] In June 2013 the company partnered with Titan Bank in Texas and Congressional Bank in Maryland in order to help them facilitate loans that would have been otherwise unprofitable for them.[24]

Initial public offering (IPO)

In March 2014, LendingClub began providing loans to

IPO with the SEC,[28] the offering taking place in December 2014.[29] On December 10, 2014, the company raised almost $900 million in the largest U.S. tech IPO of 2014. The stock ended the first trading day up 56%, valuing the company at $8.5 billion.[30]

Product extensions

Laplanche told Forbes in April 2015 that LendingClub would expand into car loans and mortgages.

Sam’s Club to deliver its “business lending center” product.[35] In August 2015 the company launched LendingClub Open Integration (LCOI), a series of APIs designed to make it easier for online brokers and advisors to connect investors with the company's loans.[36] In October of that same year, the company launched a multi-draw line of credit product for small businesses.[37]

Scandal and struggle

Like other peer-to-peer lenders, including Prosper and SoFi, LendingClub experienced increased difficulty attracting investors in early 2016. This led to the company increasing the interest rate it charged borrowers.[38] The increase in interest rates and concerns over the impact of the slowing United States economy caused a large drop in LendingClub's share price.[39]

In April 2016, a LendingClub employee reported to Laplanche that the dates on approximately $3 million of the firm's loans appeared to have been altered.[38][40] LendingClub's internal auditor engaged an outside firm to investigate the report.[41] This investigation found that $22 million in loans which had been sold to the Jefferies investment bank did not meet the bank's investment criteria. LendingClub bought these loans back from the bank and resold them.[38][42]

The

New York Times reported that the investigation also found that Laplanche had not disclosed to the board that he owned part of an investment fund that LendingClub was considering purchasing.[38] The Wall Street Journal stated that Laplanche was found to have not fully disclosed what he knew about the problematic loans.[42]

On May 6, 2016, LendingClub's board made it clear to Laplanche that he no longer had their confidence, leading to his resignation on May 9.

Securities and Exchange Commission and Department of Justice, began investigating LendingClub's disclosures to investors.[42][43] The Federal Trade Commission also sued the company.[44]

In December 2017 the Financial Times reported that LendingClub "has struggled to overcome the effects of a governance scandal last May", and that the firm "has battled to keep big investors buying loans" despite improvements to its internal governance.[45] These challenges led the company to raise its loss estimate, resulting in further drops in its share price.[45][46]

In September 2018, LendingClub paid a $2 million penalty to settle the DOJ investigation and settled with the SEC when the commission decided not to pursue charges against the company.[47][48] In July 2021, the company agreed to pay $18 million to settle the charges brought against it by the FTC.[44]

From peer-to-peer to marketplace banking

In 2019, LendingClub further expanded beyond peer-to-peer lending services, starting its Scale program, which sells representative samples of the company's pool of loans to institutional investors such as banks, hedge funds, and asset managers.[40][49] That same year, the company stopped originating small business loans, referring new SME customers to Opportunity Fund and Funding Circle.[50][51] It also launched its LCX platform, which by offering same-day loan settlement reduced the amount of time it took for institutional investors to invest in the company's loans by several weeks.[49][52]

In February 2020, the company began its $185 million acquisition of

Radius Bank.[53] In August 2020, the company discontinued its secondary trading platform because its partner Folio, which offered the secondary market, was purchased by Goldman Sachs.[54] At the end of 2020, LendingClub shut down its peer-to-peer investing platform as part of its transition toward becoming a marketplace bank.[55][56]

LendingClub's acquisition of Radius Bank was finalized in February 2021.

BBVA, and Wells Fargo to help grow its new business model.[56] In May 2022, LendingClub started offering a secondary trading platform on LCX.[59][60]

References

  1. ^ a b Barret, Victoria (December 2, 2010). "Making Personal Loans For Fun And Profit". Forbes.
  2. ^ Allen Stern (August 6, 2007). "LendingClub Founder and CEO, Renaud Laplanche – Interview". Center Networks. Archived from the original on March 8, 2012. Retrieved April 1, 2012.
  3. Tech Crunch. Archived from the original
    on March 23, 2012. Retrieved April 5, 2012.
  4. ^ Bruene, Jim (April 8, 2008). "Lending Club Abruptly Shuts Down Peer Lending". Finovate. Retrieved June 3, 2022.
  5. ^ "sv1". www.sec.gov.
  6. ^ Kincaid, Jason. "Lending Club Files For SEC Registration, Hopes To Resume Service".
  7. ^ "sv1za". www.sec.gov.
  8. ^ "LendingClub Discloses Changes to How It Sets Interest Rates". August 4, 2008.
  9. ^ "Prospectus - LendingClub" (PDF). www.lendingclub.com.
  10. Tech Crunch
    . Retrieved May 12, 2009.
  11. Tech Crunch
    . Retrieved August 15, 2010.
  12. ^ a b "America's Most Promising Companies (2011): Lending Club". Forbes. November 30, 2011.
  13. ^ Levy, Ari; Campbell, Dakin (September 8, 2011). "LendingClub attracts attention of investors". San Francisco Chronicle.
  14. Wall Street Journal
    . Retrieved May 28, 2013.
  15. ^ Wade Roush (September 8, 2011). "Thursday Deals Roundup: Zagat, Platfora, Lending Club & More". Xconomy. Retrieved June 27, 2013.
  16. ^ Calvey, Mark (January 14, 2011). "Lending Club moving headquarters to San Francisco". San Francisco Business Journal. Retrieved June 3, 2022.
  17. Washington Post
    . Retrieved April 4, 2012.
  18. ^ "Lending Club prospectus (government filings)". Lending Club. August 15, 2011. Retrieved April 2, 2012.
  19. Tech Crunch
    . Retrieved June 8, 2012.
  20. ^ a b Dakin Campbell & Ari Levy (May 2, 2013). "Google Buys Stake in LendingClub Startup Valued at $1.55 Billion". Bloomberg News. Retrieved May 28, 2013.
  21. ^ Levy, Ari (May 11, 2016). "LendingClub Founder's Surprise Exit Leaves Industry in the Lurch". NBC News. Retrieved June 3, 2022.
  22. San Francisco Business Times
    . Retrieved June 27, 2013.
  23. ^ Levy, Ari; Campbell, Dakin (September 6, 2013). "Wall Street joins the peer-to-peer loan party". Washington Post. Retrieved June 3, 2022.
  24. San Francisco Business Times
    . Retrieved June 27, 2013.
  25. ^ Kimberly Weisul (March 25, 2014). "Frustrated With Your Bank? Lending Club to Make Business Loans". Inc.
  26. ^ Ari Levy (April 17, 2014). "LendingClub, Valued at $3.8 Billion, Acquires Springstone". Bloomberg News.
  27. ^ JD Alois (May 5, 2014). "Lending Club & Union Bank Create Strategic Alliance". Crowdfund Insider. Crowded Media Group.
  28. EDGAR
    . August 27, 2014.
  29. San Francisco Business Times
    .
  30. ^ Whitehouse, Kaja (December 11, 2014). "LendingClub shares debut to 56% stock rise". USA Today. Retrieved June 3, 2022.
  31. ^ Baptiste Su, Jean. "Exclusive Interview: Lending Club CEO Plans Expansion Into Car Loans, Mortgages". Forbes. Retrieved April 2, 2015.
  32. ^ Buhayar, Noah (April 23, 2015). "Lending Club Wants to Broaden Its Membership". Bloomberg.com. Bloomberg. Retrieved April 23, 2015.
  33. ^ Farrell, Maureen (February 10, 2015). "Lending Club's Newest Deal Fuels Investor Excitement". Wall Street Journal.
  34. ^ "Will LendingClub-Opportunity Fund Affiliation Spur Growth?". Nasdaq.com. June 16, 2015. Archived from the original on August 9, 2015. Retrieved June 3, 2022. {{cite news}}: |archive-date= / |archive-url= timestamp mismatch; October 23, 2015 suggested (help)
  35. ^ "Sam's Club adds new lending service for small biz".
  36. ^ "Lending Club Launches APIs for Easy Integration with Online Brokers & Advisors - Crowdfund Insider". August 12, 2015.
  37. ^ "Building Business: Lending Club Grows SME Finance Vertical with New Line of Credit Product - Crowdfund Insider". October 15, 2015.
  38. ^ a b c d e f Corkery, Michael (May 9, 2016). "As Lending Club Stumbles, Its Entire Industry Faces Skepticism". The New York Times. Retrieved May 10, 2016.
  39. ^ "A ripple of fear". The Economist. March 23, 2016. Retrieved May 10, 2016.
  40. ^ a b "Interview with Valerie Kay, the LendingClub exec redefining the marketplace lender - Business Insider". Business Insider. 2019-12-06. Archived from the original on 2019-12-06. Retrieved 2019-12-16.
  41. ^ a b Levy, Ari (May 9, 2016). "LendingClub board lost trust in CEO amid probe: Sources". CNBC. Retrieved May 10, 2016.
  42. ^ a b c d Rudegair, Peter (May 9, 2016). "LendingClub CEO Fired Over Faulty Loans". The Wall Street Journal. Retrieved May 10, 2016.
  43. ^ Somerville, Heather; Sadam, Rishika (May 16, 2016). "Lending Club under probe by U.S. Justice Dept, receives subpoena". Reuters. Retrieved June 3, 2022.
  44. ^ a b "LendingClub Agrees to Pay $18 Million to Settle FTC Charges" (Press release). Federal Trade Commission. July 14, 2021. Retrieved June 3, 2022.
  45. ^ a b McLannahan, Ben; Badkar, Mamta (8 December 2017). "Lending Club shares plumb new depths". Financial Times. Retrieved 11 December 2017.
  46. ^ Reuters (7 December 2017). "LendingClub Shares Tumble to a Record Low". Fortune. Retrieved 11 December 2017. {{cite news}}: |last1= has generic name (help)
  47. ^ "Lending Club Agrees To Pay $2 Million Penalty To Resolve Investigation Into Its Lending Practices" (Press release). U.S. Department of Justice. September 28, 2018. Retrieved June 3, 2022.
  48. ^ Horowitz, Julia (September 29, 2019). "SEC charges LendingClub unit with mishandling investors' money". CNN Money. Retrieved June 3, 2022.
  49. ^ a b Green, Rachel (October 14, 2019). "LendingClub plans to connect institutional investors to borrowers with its new digital marketplace platform LCX". Business Insider. Retrieved June 3, 2022.
  50. ^ Wack, Kevin (April 23, 2019). "LendingClub to stop originating small-business loans". American Banker. Retrieved June 3, 2022.
  51. ^ Stone, Todd (April 23, 2019). "Lending Club Calls It Quits On Underwriting Small Business Loans". DeBanked. Retrieved June 3, 2022.
  52. ^ Hernandez, Will (October 10, 2019). "LendingClub's new pitch to institutional investors". American Banker. Retrieved June 3, 2022.
  53. ^ Son, Hugh (February 18, 2020). "LendingClub buys Radius Bank for $185 million in first fintech takeover of a regulated US bank". CNBC. Retrieved June 3, 2022.
  54. ^ Hinchliffe, Ruby (October 9, 2020). "LendingClub shuts retail P2P offering as it focuses on institutional investors". FinTech Futures. Retrieved June 3, 2022.
  55. ^ Calvey, Mark (October 13, 2020). "LendingClub pulls plug on peer-to-peer lending". San Francisco Business Times. Retrieved June 3, 2022.
  56. ^ a b Calvey, Mark (June 8, 2021). "LendingClub makes key hires to fuel digital banking growth". San Francisco Business Times. Retrieved June 3, 2022.
  57. ^ Cross, Miriam (January 19, 2021). "LendingClub-Radius Bank deal clears final regulatory hurdles". American Banker. Retrieved June 3, 2022.
  58. ^ Alexander, Gary (February 8, 2021). "This Is LendingClub's Do-Over Moment, And The Future Is A Minefield Of Uncertainties". SeekingAlpha. Retrieved June 3, 2022.
  59. ^ Alois, J.D. (June 10, 2022). "LendingClub CEO Scott Sanborn: We Are Taking Big Banks Most Profitable Customers". Crowdfund Insider. Retrieved June 3, 2022.
  60. ^ "LendingClub Says Client-to-Client Loans Mark Evolution for Its Online Marketplace". PYMNTS. May 7, 2012. Retrieved June 3, 2022.
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