LENDINGCLUB
MARKETPLACE LENDER IPO: DECEMBER 2014 MARKET VALUE LOSS: $8.8 BILLION
Launched by Frenchman Renaud Laplanche on Facebook in
2007 as a loan marketplace, LendingClub’s mission was to replace bankers by directly connecting borrowers to lenders, lowering costs. Still, bank partners like Cross River helped LendingClub grow at blistering speeds. By 2014 it reached $5 billion in loans and went public, peaking at a value of $10 billion.
Not long after, financial filings revealed that LendingClub was burning 43% of its revenue on sales and marketing. In its first four years as a public company, LendingClub lost $340 million.
Then, in September 2018, its assetmanagement arm, LC Advisors, and Laplanche, plus another executive, agreed to pay $4.2 million in penalties to the SEC for misleading investors about the loans they were buying. Regulators alleged they used LC Advisors to prop up loan underwritings and improperly adjusted monthly fund returns to downplay risk. Laplanche was barred from the securities industry, and today LendingClub’s stock is down 80% from its peak.
“LendingClub was brought public by Morgan Stanley’s tech bankers. They tried to sell it as a tech deal,” says Derek Pilecki of hedge fund Gator Capital Management. “It’s a loan originator.”