Lending Club Venture Capital: A Look at Lending Club’s Funding Status

Lending Club is a popular peer-to-peer lending company based around the business model of connecting borrowers and individual investors as lenders with the hopes of cutting banks out of the consumer lending business. Some have recently questioned what would happen to investors money if either Lending Club or Prosper Marketplace went bankrupt, so it makes sense to do some research as to each company’s financial situations.

Lending Club has received two rounds of venture capital funding. The company received a $10 million A round in August of 2007 from Norwest Venture Partners and Canaan Partners after receiving a $2 million Angel investment. As a result of that set of funding, Jeff Crowe and Dan Ciporin (former ceo of shopping.com) joined the company’s board of directors.

The company received its second round of venture capital in nineteen months later in March of 2009. Lending Club received a $12 million B round of funding from Morgenthaler Ventures. The company’s CEO commented at the time about the round of funding, saying in a press release that, “This additional capital will allow us to continue to expand our capabilities and accelerate the growth of our customer base.” When the second round of venture capital was secured, Lending Club has originated a total of $28 million in loans. Now that number has more than doubled during the last 10 months.

Based on the amount of time between Lending Club’s first and second round of capital ($10 million over 19 months), it could be reasonably speculated that Lending Club would have about 22 months of runway from its B round of funding in March of 2009. That would put Lending Club due for another round of venture capital funding in about January of 2011.

This date could be pushed out if Lending Club’s revenues are improving. The company doesn’t release much about its financial status since it is privately held. Lending Club should be making more revenue than it did in 2008 and 2009 simply because it is servicing a much larger loan portfolio now than it has in the last two years.

The company charges a 1.25-4.50% origination fee to borrowers. Assuming the average fee was 2.5%, this mean Lending Club would have earned about $2 million in origination fees. Lending Club also collects a 1% service fee for payments made to borrowers. To date, that would have net Lending Club about $53,690 based on the payments that lenders have received.  It’s hard to say for certain what Lending Club’s revenue situation looks like currently, but it does appear that the company is headed in the right direction on a revenue perspective.