Readying For An IPO, Peer-To-Peer Lending Marketplace Lending Club Raises $125M From Google And Others At $1.6B Valuation
Peer-to-peer lending platform Lending Club is announcing a huge new investor today: Google. Google and existing investor Foundation Capital have put $125 million in Lending Club, which was valued at $1.55 billion in the round. As part of this investment Google will take an observer seat on the Lending Club Board alongside existing Board members including Kleiner Perkins’ Mary Meeker, ex-chairman and CEO of Morgan Stanley John Mack and former U.S. Treasury Secretary Larry Summers.
The investment by Google came as part of a secondary transaction whereby new and existing investors acquired shares from existing investors. Last year, Lending Club raised $17.5 million from Kleiner Perkins, bringing its total outside investment to just under $100 million. Because this is a secondary round, there is no new money being raised, as Google and Foundation are buying out existing early investors.
Lending Club, which brings together lenders and borrowers who want to cut out banks in the process of investing among peers, has facilitated a total of $1.65 billion in loans. In the last quarter, Lending Club saw $350 million in loans made through the platform, and has generated 22 consecutive quarters of positive returns. Lending Club expects to issue $2 billion in loans this year alone.
The company’s wholly-owned subsidiary LC Advisors, an SEC Registered Investment Advisor, has launched several funds in the last 2 years and now has more than $450 million in assets under management.
To put Lending Club’s growth in context, when peer-to-peer lending began to establish itself about five years ago, there was a lot of excitement. By taking banks out of the equation altogether to connect investors directly with those in need of a loan, p2p lending almost immediately had tons of appeal (for both consumers and investors). However, thanks to heavy scrutiny from the SEC, companies like Lending Club and its main competitor Prosper faced a few challenges. However, the SEC finally greenlit the model, and Lending Club has been growing ever since.
The company announced last year that it is cash-flow positive for the first time. Last year, the company added 50 employees, including the former Visa head of global development and Morgan Stanley CTO John McIlwaine and E-Trade general counsel Russel Elmer. Lending Club is also reportedly gearing up for a potential IPO in the next year or so.
“Lending Club is using the Internet to reshape the financial system and profoundly transform the way people think of credit and investment” said Google’s VP of corporate development, David Lawee. “We are excited to be a part of it.”
Having Google (not Google Ventures) as an investor is a huge deal. It’s not that often that Google makes a corporate and strategic investment in a company. In fact it’s pretty rare. The investment was made through Google’s new last-stage investment arm, headed by Lawee. Most recently, Google participated in Survey Monkey’s recent funding.
“The Google team is excited that Lending Club could transform the banking space,” says CEO Renaud Laplanche. “The company believes that our technology brings better value for consumers.
“By promoting the transparency and democratization of data, Lending Club is opening up tremendous opportunities for disintermediation, which is disrupting the traditional banking model,” said Charles Moldow, general partner at Foundation Capital, which has invested $more than $50 million in the company. He adds that the investment was the one of the few largest in the firm;s 18-year history, which is “a testament to the magnitude of the opportunity” for the company.
Laplanche explains to us that this year will be spent continuing to raise awareness for company and grow fast, specifically focusing on helping borrowers with good credit pay off credit card balances, and access lower interest rates from borrowers.
As for the rumors of an IPO, Laplanche confirms that Lending Club is preparing for a potential IPO and hopes to be ready sometime in 2014 for a public offering.
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First Round Capital Expands $500K, Student-Run Investment Arm Dorm Room Fund To Silicon Valley
VC firm First Round Capital has steadily expanded its The Dorm Room Fund from Philadelphia, to New York. And today, the firm is heading west with its latest Silicon Valley and San Francisco Bay Area-based initiative, which is a $500,000 fund run by an all-student investment team to invest purely in student-run startups in the area. You can find out more about the Bay Area Fund here.
We’re told the first Dorm Room Fund Bay Area Investment Team is composed of 10 students from Stanford and Cal Berkeley. As we explained previously, First Round puts around $500,000 into a fund student startups in the area. The student-run investment team source investments and make decisions unilaterally to invest in startup ideas. As students graduate, more will be added.
The average each investment is around $20,000, and is structured as an uncapped-convertible note First Round signs off on every investment and is available to the student group to consult on questions, but this is largely run by the students. In fact, First Round will conduct a training for the group with the goal of helping them to understand investment philosophies and scout out interesting ideas and businesses independently. Any carry made by the investment (i.e. if the startup is acquired) is put back into the universities.
The Silicon Valley team is composed of Mediha Abdulhay (UC Berkeley), legendary investor Vinod Khosla’s son Neal Khosla (Stanford), Ryan Jung (UC Berkeley), Bastiaan Janmaat (Stanford), Ruby Lee (Stanford), Adam Goldberg (Stanford), Rick Ling (UC Berkeley), Anjney Midha (Stanford), Amanda Bradford (Stanford) and Jeremy Fiance (UC Berkeley).
Philadelphia Dorm Room Fund launched last year and already has committed 9 companies so far including Dagne Dover, Firefly and Whamix.
As we’ve mentioned in the past, it’s good for the startup ecosystem to help students find capital to get their ideas off the ground. Not only is it a great way to actually find interesting ideas that could be the next Facebook or Google, but even if these ideas don’t end up turning into products, First Round is finding and fostering promising talent.
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New York City Turns Out For The First Day Of Disrupt NY 2013
The first day of TechCrunch Disrupt NY is a wrap.
The morning started with a fireside chat with Chris Dixon and Eric Eldon where the Andreessen Horowitz partner explained his take on Bitcoin startups and how 3D printing could transform manufacturing.
TechCrunch founder Michael Arrington took the stage next with Benchmark’s Bill Gurley to talk New York City startups. Gurley also revealed that he sees Uber growing faster than eBay did. A rather shocking claim seeing how eBay was worth $5 billion just two years after Benchmark’s $6.7 million investment in 1997.
The first day of Disrupt NY 2013 wasn’t entirely heavenly rays of sunshine. Chamath Palihapitiya, a former Facebook executive and founder of investment firm The Social+Capital Partnership, explained that the tech world should be “utterly ashamed,” because “we are at an absolute minimum in terms of things that are being started.” Yep, Palihapitiya calls it as he sees it.
Jonah Peretti took the stage to deliver a keynote. He talked about the social web, cats, and explained why sex is more popular than Jesus on Google.
When Dennis Crowley took the stage, he explained to TechCrunch’s Colleen Taylor that Foursquare’s API is currently underutilized. Location apps will get smarter, he promised. Oh, and Foursquare is still growing — at least that’s what Crowley said.
Jim Bankoff’s Vox Media is stepping up its ad game with the launch of Vox Creative. With this, Bankoff stated that the company will be profitable in 2013.
Betaworks’ John Borthwick took the stage with TechCrunch’s Alexia Tsotsis and talked about the acquisition of Instapaper and, although briefly, Digg’s upcoming RSS reader — a product that was apparently in the works well before Google killed Reader.
Big things are in the works with Gilt Chairman Kevin Ryan and 10gen Founder Dwight Merriman who announced on stage that they were looking to launch one or two startups in the coming months.
Flipboard is huge. With 56M users, CEO Mike McCue explained to TechCrunch’s Eric Eldon that they aim to make the mobile app the home of brand advertising for mobile publishers.
The afternoon brought the first three rounds of the Startup Battlefield — a startup competition where 30 companies compete for the Disrupt Cup and a giant $50k check.
Here are the video highlights of the day:
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GE Puts $105M Into Pivotal Labs, The New EMC And VMware Platform Initiative, But Here’s What It Is Missing
GE is taking a 10 percent stake and investing $105 million in the Pivotal Initiative, the spin-out from EMC and VMware. GE will work with Pivotal on research and development with the aim of helping customers develop data analytics offerings. GE says its investment aligns with its focus on the “Industrial Internet.”
The move shows GE’s investments in developing its own software prowess. GE and Pivotal will use the ”Global Software Center,” which is headquartered in San Ramon, Calif., to develop a software platform that GE will deliver as a service to industrial customers. According to a press release issued this morning, Pivotal’s platform will serve as a way for the company to launch applications and offer data analytics.
The Pivotal technology draws from EMC and VMware’s stable of products and services, either developed internally or acquired. VMware’s Cloud Foundry PaaS, SpringSource and Gemstone and EMC’s Greenplum and Pivotal Labs groups form the foundation for one “virtual organization,” with 1,400 employees. Cetas, VMware’s big data analytics solution, is also part of the group.
Pivotal is now calling itself an enterprise Platform as a Service (PaaS), a commentary on the lack of any meaning that can be found with the usual “private cloud,” rhetoric that has become the catch-all phrase for anything “cloud,” in the enterprise. In fact, there is not one reference to private cloud in the press release.
Yefim Natis, vice president and distinguished analyst at Gartner, has tepid reviews for Pivotal. He said it is noteworthy that Pivotal separated its application infrastructure technologies (Pivotal) from systems infrastructure (the remaining VMware assets). It’s ambitious and provides an option for IT versus the range of vendors, such as Red Hat and data analytics companies such as MapR, which has been an EMC partner in years past.
Integration is a core missing piece, Natis said in a statement. The effort lacks what is widely recognized as an EMC/VMware weakness. And that’s the lack of a truly independent platform similar to Amazon Web Services or even a SaaS offering to integrate data and applications.
He further states that the current composition of technologies does not include a high-productivity development platform:
The foundation of Pivotal’s application platform, the CloudFoundry CEAP and PaaS, is using a cloud-based model of elasticity, preserving compatibility with many enterprise Java applications. Offering Java or Ruby frameworks as the primary programming model is a far cry in productivity from the cloud-native metadata-driven application PaaS (aPaaS).
And it is missing the social/mobile connection that is part of the “nexus of forces,” derived from data analytics:
Without the social and mobile technologies, Pivotal will not only be unable to support some of the most active areas of recent innovation, but also will not discover the capabilities that arise in the nexus, from the relationship among the four forces. An application infrastructure company in 2013 can hardly claim the mantle of an innovator without an investment in all four components of the Nexus of Forces.
It still seems to me that the Pivotal Initiative is still tied to a model that focuses on building out a company’s capital expenditures (CapEX) as opposed to driving a decrease in costs for expensive hardware and focusing on operations expenditures (OpEx). The OpEx model is what we equate with companies adopting Amazon Web Services and elastic services that emulate that model. I’d put OpenStack initiatives more in the (OpEx) model, because it helps companies use existing infrastructure to offer services to its employees or customers.
Pivotal is ambitious, and it has a chance but there are still some missing pieces that need to be filled.
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Source: Mashery Is Selling To Intel For More Than $180M
We’re hearing from a source familiar with deliberations that Intel is buying Mashery for more than $180 million, in a move that shows how the chipmaker is slowly becoming both a hardware and a software company. ReadWrite had ballparked the acquisition price at 2-3x the company’s last reported valuation of $60 million.
ReadWrite, which first broke the news and confirmed the story, reported that Mashery’s 125 employees found out about the sale via an early morning email and that most will be given jobs in Intel’s Internet services division. Terms were not officially disclosed, but the deal was “not material to Intel’s financial results,” according to a statement.
API management company Mashery was founded in 2006 and raised about $35 million in funding prior to its acquisition. Mashery founder Oren Michels did not comment about the size of the deal when we inquired earlier today.
Mashery and Intel have been friends for awhile, having formed a partnership last November to develop the Intel Expressway API Manager. According to Programmable Web, the service is designed to solve the problems of ‘secure API enablement and API product management’ for Enterprises when they are looking for an API management solution.”
Intel has been showing signs that it is growing its investment in its software division. This latest move follows Project Rhino, which will optimize its own Hadoop distribution for its server chips. The move is in line with Intel’s strategy to become more of a security software provider, as symbolized most in the acquisition of McAfee Software for $7.7 billion in 2010.
The API management space has matured in the past few years. Apigee, Singly and Layer 7 all compete in the space. Apigee is the oldest one of the group and has recently diversified to offer analytics and API infrastructures for next-generation, software-defined data centers.
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