News

March 29th 2016, Daily News Digest, Lending Times

  • New private equity player in marketplace lending focused on all rounds.
  • Fast growing Klarna targeting the US with existing impressive business.
  • Lending Club stock, is the sentiment too negative?
  • Betterment raises $100mil at $700m valuation.
  • 1 real estate crowdfunding platform per $1m inhabitants in NZ?

New Private Equity Strategy From Three Industry Leaders To Focus On Marketplace Lending Industry, (PR Newswire), Rated: AAA

Three key industry leaders are partnering to form LendTech Capital Partners (“LendTech”), a new investment advisor focused on private equity strategies within the marketplace lending industry.

Joint venture between affiliates of Liberum,a London based investment bank who conceived Europe’s first institutional investor in marketplace loans in 2013 and has raised over $1.9B for marketplace lending funds and platforms; Ranger Alternative Management II, LP, an investment advisor which manages two leading direct lending funds, The Ranger Specialty Income Fund and the Ranger Direct Lending Fund, the latter which is publicly traded on the main market of the London Stock Exchange (ticker: RDL) and Velocity Venture Group, whose members have led over $3B in strategic investments, acquisitions, and recapitalizations in the payments, transaction services, and banking industries.

LendTech’s private equity strategy seeks to make Seed, Series A, and follow-on investments and will focus on not just marketplace lending platforms, but also complimentary businesses in industries such as technology, media and marketing.

Fast-growing Klarna expanding its role easing e-commerce, (The Columbus Dispatch), Rated: AAA

Klarna allow you to run a tab, like at a bar, but for eCommerce sites. And pay the bill later.

By 2014, Klarna was generating $300 million in revenue based on client sales of roughly $10 billion. It now serves 17 nations in Europe. Klarna launched in the United States in September 2015 with Overstock.com and Shoes.com  and is seeking more partners.

The Swedish e-commerce company recently made Columbus its North American headquarters.  In slightly more than a year, the Columbus headquarters has grown from a handful of employees to 85 and is expected to have several hundred employees in the next year and as many as 500 in the next three years.

Klarna pays the retailer and bears the risk of getting shoppers to fulfill their end of the deal later. The Klarna name is invisible to the entire process.

“We’re looking at 700 percent growth this year, although our head count won’t grow that much,”

Ten Questions for San Francisco Fed President John Williams, (American Banker), Rated: A

Banks are very concerned about competition from marketplace lenders. Should they be? Do those lenders need more regulatory oversight?

I think a lot of bankers may have gotten used to a higher [return on equity] and a stable business model and some threats from disruptive or other competition is I think a good motivator to do what you do even better. I think what we want to make sure is that it’s a level playing field, that the same rules apply across [business models], based on what the activities are.

I do worry that some of these online financial products allows you to do predatory lending or other scams at massive scale.

As fintech companies become more and more enmeshed with the banking system, with that comes safety and soundness [compliance], AML, BSA, all that. The thing I think we need to message to the fintech world is that there are reasons we have these laws. These aren’t just because regulators are mean, grumpy people that like to tell people, “No.”

LendingClub: The Sentiment Is Too Negative, ( Seeking Alpha), Rated: A

After the market closed for the three-day weekend, financial outlets reported that Prosper had a bad bond offering with low investor appetite.

The news will add to the negativity on LendingClub as the company was increasingly reliant on institutions to fund growth on the platform.

The recommendation is to use any dips to load up on LendingClub.

Financial Tech: Falling Loan Securitization Rates Portend Rising Defaults, Threaten Industry Profitability, (Seeking Alpha), Rated: A

Slowing securitization rate in the Peer-to-Peer (P2P) lending industry suggests industry slowdown is looming.

Backdrop of slowing securitization suggest underlying P2P loans are riskier than previously thought. Unrealized potential for profitability could vanish due to rise in non-performing loans and loan growth slowdown.

A near halt in IPO market and funding contraction from institutional investors should further pressure P2P loan origination. This combined with securitization slowdown will likely hamper growth prospects.

Lack of regulation for non-bank lenders creates unknown regulatory environment and potential for a recurrence of an opaque subprime lending market with latent risks to financial markets.

Robo-Adviser Betterment Gets $100 Million in Venture Capital, (NY Times), Rated: A

Despite a turbulent market and dwindling investor appetite for stakes in private start-ups, the robo-adviser firm Betterment has received $100 million from venture capital investors, pushing its valuation to $700 million, nearly double its value this time last year. Betterment, based in New York, had a $60 million investment round in February 2015, valuing it at $450 million.

Betterment has $3.9 billion in assets under management, up from just over $1.1 billion at the end of 2014.

Will FinTech Disrupt the $100 Billion Self-Directed IRA Industry?, (IRA Exchange), Rated: A

It is hard to imagine that our $100 Billion industry still relies on paper print outs, faxes and endless 800 customer service calls, and that it fails to effectively utilize technology that already exists.  But it’s true.

Regulator warns of P2P lending risks, (Mortgage Business), Rated: A

ASIC has provided guidance to peer-to-peer (P2P) lenders. The corporate regulator has made available an information sheet that describes the current regulatory regime for P2P lenders (also known as ‘marketplace’ lenders). The information sheet also details the key risks they face in providing P2P products, as well as good practice strategies they may consider adopting.

Former Senior Bankrate Executive Joins Even Financial to Grow Partner Network, (Yahoo Finance), Rated: A

Raed Khawaja, formerly VP, Business Development for financial lead generation company Bankrate (RATE) joined financial technology startup Even Financial on March 28. Mr. Khawaja has been largely responsible for building and growing Bankrate’s large B2B partner network, which drives users to Bankrate properties by delivering information and tools through partner publisher websites.

LendingClub Corp: Too Much Institutional Dependence?, ( Business Finance News), Rated: A

Lending Club has been the largest marketplace lender in 2015, issuing 20% of the loans. The worrisome issue for Mr. Laplanche is that 45% of the loans went through the institutional lenders last year, according to Financial Times.

Many analysts believe that the online lenders should reduce their dependence on institutional money, that will make the business stronger from funding point of view. Business Finance News believes that the online lenders should continue with the institutional capital in order to further capitalize the lending market share.

Multiple Kiwi Crowdfunding Platforms are Sizing Up Real Estate Investing, ( Crowdfund Insider), Rated: A

The New Zealand investment crowdfunding market has progressed rapidly since the Financial Markets Authority (FMA) provided a regulatory structure to allow both equity and debt based platforms to operate. Today there are 8 equity operations and 4 licensed peer to peer platforms. New Zealand is a relatively small market with a population of about 4.6 million.

According to a recent report in the New Zealand Listener, Property Mogul expects to be the first buy-to-let financing platform similar to what has emerged in the UK.

PledgeMe has apparently applied for a P2P license and expects to move into real estate finance.

Snowball Effect sees a move into commercial and/or residential finance at some point this year.

Crowdcube NZ was cautious on the Property Mogul strategy labeling it “property syndication in drag”.  But while throwing shade on the Property Mogul approach, Crowdcube NZ Director David Wallace is looking to move into peer to peer lending as their “next step to help companies raise capital”.

Real estate / property crowdfunding is one of the hottest sectors in the internet finance space.

NSR Invest Hosts Workshop for Financial Advisors on Peer-to-Peer Lending Investments, April 11-12, in San Francisco, (Virtual Strategy), Rated: B

The Wealth Management Workshop takes place April 11th – 12th in San Francisco, as part of LendIt USA 2016, the world’s largest conference dedicated to online lending and investment marketplaces.

 

Author: George Popescu

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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