Investors including Google are putting $125 million into Lending Club, a service that matches people seeking loans with people willing to lend them.
The cash is going to existing venture investors rather than into the company in a financing structure known as a secondary transaction, Lending Club Chief Executive Renaud Laplanche said in an interview. He declined to identify the investors who are cashing out.
Existing investor Foundation Capital is also among the latest buyers, bringing its total investment in the company to more than $50 million, a Foundation representative said in an email. The transaction values Lending Club at $1.55 billion, Laplanche said, up from $550 million at the time of the company's last funding round almost a year ago.
First steps in p2p moneylending
Large-scale secondary market transactions, which allow employees and other existing investors to cash out their stakes, are becoming increasingly common among venture-backed companies. One reason for this is that many early investors are having to wait longer than in the past to see returns on their investments through initial public offerings. The median age of a venture-backed company at the time of its IPO is about nine years, according to the National Venture Capital Association, compared with about 5.5 years in the late 1990s.
Microblog Twitter and notetaking app Evernote are among the venture-backed companies that have tapped secondary markets. Google's David Lawee, who oversees late-stage investments at the search-engine giant, will take an observer seat on Lending Club's board.
“We think there's a lot of alignment between the two companies,” Laplanche said, citing Google's work letting small business owners advertise directly on Google, just as Lending Club connects lenders and borrowers directly. The companies will explore joint opportunities, he said, but were not in a position to announce anything yet.
Lending Club last raised funds in June 2012, when Kleiner Perkins Caufield & Byers invested $15 million and Morgan Stanley chairman emeritus John Mack invested $2.5 million. It has raised $102.8 million total. The company is eyeing a 2014 initial public offering, Laplanche said, as long as market conditions remain favorable. He expects revenue of around $90 million this year.