A popular media biz maxim is the rule of three, in which three similar, albeit independent, news events constitutes a trend. So, in that tradition, let me be the first to declare this to be: The Week Online Lending Came of Age.
Here are the three new items:
1. LendingClub Corp., a San Francisco-based peer-to-peer lending marketplace, on Monday set its IPO terms to 57.7 million shares being offered at between $10 and $12 per share. It would have an initial market cap of approximately $3.97 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol LC, with Morgan Stanley (MS) and Goldman Sachs (GS) serving as co-lead underwriters. LendingClub reports a $16 million net loss on $87 million in revenue for the first half of 2014, compared to $1.7 million in net income on $37 million in revenue for the year-earlier period. It has raised nearly $400 million in VC funding from such firms as Norwest Venture Partners (16.5% pre-IPO stake), Canaan Partners (15.9%), Foundation Capital (12.8%), and Morgenthaler Venture Partners (9.2%).
2. OnDeck, a New York-based online platform for small business lending, today set its IPO terms to 10 million shares being offered at between $16 and $18 per share. It would have an initial market cap of $1.12 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol ONDK, with Morgan Stanley listed as left lead underwriter. It reports a $14.4 million net loss on nearly $108 million in revenue for the first nine months of 2014, compared to an $18.7 million net loss on $42 million in revenue for the year-earlier period. OnDeck has raised over $170 million in VC funding, from firms like RRE Ventures (15.4% pre-IPO stake), Institutional Venture Partners (14.4%), Village Ventures (10.8%), Sapphire Ventures (10.1%), First Round Capital (6.5%), Google Ventures (6.3%) and Tiger Global (6%).
3. AvantCredit, a Chicago-based online consumer loan provider, has raised $225 million in Series D funding. Tiger Global Management and August Capital co-led the round, and were joined by new investors DFJ Growth, RRE Ventures, KKR & Co. and Peter Thiel. The company now has raised $1.03 billion in total equity and debt funding.
Each of these companies is different from the others, in terms of both who is doing the lending and who is doing the borrowing. But each of them uses an online platform that disintermediates traditional bankers — the sort of thing that would probably worry an institution like Wells Fargo (WFC), if only it weren’t the sole limited partner of top LendingClub shareholder Norwest Venture Partners. It should be interesting to see how Wall Street reacts to the IPOs later this month, and how that reaction impacts future valuations for companies like AvantCredit.
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