LendingClub: The Success Story of the American Financial Service Provider Company

Shalini Rath Shalini Rath
Nov 20, 2022 6 min read
LendingClub: The Success Story of the American Financial Service Provider Company

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by LendingClub.

It can be safe to assume that one of the most vital parts of everyone's life is banking and financial benefits. We are all heavily dependent on the bank and the financial sector to effectively use our money for loans, lending, investments, or insurance.

These days, the options of banks and financial services are endless with many people using different kinds of banking and various financial services like insurance premiums, paying utility bills, online shopping, mobile recharge, etc all through Debit/Credit cards. The introduction of technology in this sector has also made transactions simplified and much easier.

In order to develop and obtain future financial rewards, multiple financial services are being offered by major banks, such as personal banking, and business banking solutions. In addition to this, banks also offer investment advice or consultancy to assist investors in making the best use of their money.

LendingClub, which was founded in 2006 in the USA, offers a wide range of financial products and services to help its customers reach their financial goals. The company was founded as the world’s first peer-to-peer lending platform.

To gain some insights into LendingClub, we have articulated some relevant information on LendingClub’s products and services, its business and revenue model, competition, and the challenges it faced.

LendingClub – Company Highlights

Headquarters California, USA
Sector Financial Services
Founder Renaud Laplanche, Soul Htite
Founded 2006
Type Public Company
Revenue $679.8 million (2021)
Total Funding Raised $392.2 million
Website www.lendingclub.com

LendingClub – About and How it works?
LendingClub – Industry details
LendingClub – Founders
LendingClub – Mission and Vision
LendingClub – Business Model
LendingClub – Revenue and Growth
LendingClub – Challenges and Controversies
LendingClub – Funding, and Investors
LendingClub – Mergers, and Acquisitions
LendingClub – Investments
LendingClub – Advertisements and Social Media Campaigns
LendingClub – Awards and Achievements
LendingClub – Competitors
FAQs

LendingClub – About and How it works?

LendingClub was founded in 2006 with the motive to lend its financial services. The company is San Francisco, California-based financial services startup. The best part about the company is that it was the first peer-to-peer lender to register its offers as shares with the Securities and Exchange Commission (SEC) and to allow secondary loan trading. LendingClub was the world's largest peer-to-peer lending marketplace at one point. Around December 2015, the firm announced that $15.98 billion in loans have been originated on its platform.

LendingClub also provides traditional direct-to-consumer loans, such as vehicle refinancing, through WebBank, an FDIC-insured, state-chartered industrial bank based in Salt Lake City, Utah. The services offered by LendingClub are – Personal loans, business loans, auto refinancing, personal banking, institutional banking, and institutional investors.

Two years ago, LendingClub announced to shut of its peer-to-peer lending platform. The company no longer provides new loans for individual investing.

LendingClub – Industry details

As per reports, it is estimated that the global financial services market is worth $20.49 trillion in 2020. The banking and financial sector industry is said to make up a quarter of the world’s economy. This industry is undoubtedly regarded as the crucial nectar in each one of our lives. Reports also claim that about 6.6 million Americans are employed in the financial and banking sector.

LendingClub – Founders

Lending Club was founded by Renaud Laplanche and Soul Htite in 2006.

Renaud Laplanche
Renaud Laplanche

Renaud Laplanche

Renaud Laplanche had co-founded and served as the CEO of LendingClub for almost a decade. He is currently the co-founder and CEO of Upgrade, Inc., which is a fintech company. Before this, he is also associated with founding another company TripleHop Technologies, which was later acquired by Oracle Corporation. Born in France, Renaud has studied business and law and holds an MBA degree from HEC Business School in Paris, France, and London Business School. In his entire career journey, he has worked on cases related to mergers and acquisitions, joint ventures, and many investment transactions.

Soul Htite

Soul Htite is a fintech entrepreneur who co-founded LendingClub. Presently, Soul serves as the founder and CEO of Valt, a software company that offers financial services. Along with Valt, Soul is also the co-founder of Upgrade, Inc. He has worked with multiple organizations such as Oracle, SinoLending, Assured Asset Management, and True North. His main interests are real-time online services and system architecture for high availability and fault tolerance.

LendingClub – Mission and Vision

LendingClub’s mission reads as, β€œto transform the banking system to make credit more affordable and investing more rewarding.”

The vision statement of LendingClub is, β€œOur leaders share a vision of expanding financial opportunities for all Americans through responsible innovation.”

LendingClub – Business Model

LendingClub operates its business through the fee-based model. The business of LendingClub offers borrowers to post loan listings on its website by providing information about themselves and the loans they want to obtain. After a borrower has visited the website, the company then decides whether the borrower was creditworthy based on the borrower's credit score, credit history, desired loan amount, and debt-to-income ratio and awards a credit grade to its accepted loans, which set the payable interest rate and fees. A typical loan term is three years, with a five-year option available for a higher interest rate and extra expenses.

As mentioned earlier, LendingClub offers personal banking, personal loans, institutional banking, institutional investment, business banking and loans, and other related financial services and loans.

LendingClub – Revenue and Growth

LendingClub has made a total of $679.8 million in revenue as of 2021. LendingClub generates its income by charging origination fees to borrowers and servicing fees to investors. The operating income is reported to be around $18.4 million.

LendingClub – Challenges and Controversies

During early 2016, LendingClub had increasing trouble obtaining investors. As a result, the company raised the interest rate it charged borrowers three times in the first three months of the year. The rise in interest rates, along with fears about the impact of the faltering US economy, resulted in a significant reduction in LendingClub's share price. The Financial Times stated in December 2017 that LendingClub has failed to escape the impact of a governance controversy in May and that the company has battled to keep major investors buying loans despite internal governance changes. These difficulties have caused it to boost its loss forecast, resulting in additional reductions in its share price. Many other peer-to-peer lending organizations were also having issues at the time.

LendingClub – Funding, and Investors

Lending Club is backed by a group of 24 investors. The most recent investors are Two Sigma and Panorama Point Partners. The other investors' names are – Flint Capital, Employee Stock Option Fund, FinSight Ventures, Sands Capital Ventures, BlackRock, T. Rowe Price, Coatue, and DST Global.

Lending Club has raised $392.2 million in investment across 15 rounds. Their most recent fundraising came on April 9, 2017, in the form of a Post-IPO Equity round.

Date Funding Round Fund Amount Investor
April 9, 2017 Post-IPO -Equity - -
August 22, 2014 Venture Round - -
April 17, 2014 Debt Financing $50 million -
Apr 17, 2014 Private Equity Round $65 million -
November 13, 2013 Secondary Market Capital $57 million -
May 1, 2013 Secondary Market Capital $125 million CapitalG, Foundation Capital
June 6, 2012 Venture Round $17.5 million Kleiner Perkins

LendingClub – Mergers, and Acquisitions

Lending Club has purchased two businesses. Radius Bank was their most recent acquisition, which occurred on February 18, 2020. Radius Bank was purchased for $185 million. In 2014, LendingClub purchased its first company called, Springstone.

LendingClub – Investments

On September 4, 2019, Lending Club made an investment in Even Financial. The Venture Round - Even Financial investment was valued at $25 million.

LendingClub – Advertisements and Social Media Campaigns

LendingClub posts short ad videos on the website called β€˜ispot.tv’ on personal loans, business loans, credit cards, debit cards, etc. You can find these videos are short with the right blend of marketing tactics targeted toward their audience with interesting characters and strong dialogue delivery.

LendingClub – Awards and Achievements

Some of the awards won by LendingClub are;

  • LendingClub was named Best Bank or Credit Union for Online Experience by Nerdwallet (2021)
  • LendingClub also won Celent Model Bank Award for Credit Innovation During the Pandemic for their Paycheck Protection Program response.
  • LendingClub won for Top Rated Company Perks & Benefits

LendingClub – Competitors

LendingClub has the following competitors

  1. Avant

2. Β Lendable

3. Β SoFi

4. Β Pagaya

5. Happy Money

6. Β Auxmoney

7. Β SocietyOne

8. SoLo Funds

9. Upstart

10. Primavera Financial

FAQs

Who is the CEO of Lending Club?

Renaud Laplanche is the founder & CEO of Lending Club.

Where is the head office of the Lending Club?

The Head Office of Landing Club is in San Fransisco.

Is Lending Club shutting down?

Yes, Lending Club is shutting down.

Why is Lending Club shutting down?

Yes. As per the company's website, it's not economically possible for the company to continue its operation.

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