A major investment by Google has reportedly brought Lending Club, a platform that connects loan seekers with anonymous individual backers, into the rarefied club of companies worth $1 billion or more.
Lending Club announced today that Google spearheaded a $125 million deal with other investors to buy a minority stake in the six-year-old company. Google's stake is reportedly less than seven percent.
This new investment values the peer-to-peer lending startup at $1.55 billion, chief executive Renaud Laplanche told Reuters. The company counts among its board of directors prominent venture capitalist Mary Meeker, former Morgan Stanley chair John Mack and former U.S. Treasury secretary Larry Summers.
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Lending Club offers borrowers a lower interest rate than bank loans. The San Francisco-based company is part of a growing trend for entrepreneurs and others to bypass traditional financial institutions and appeal directly to their consumers or peers for funding. One popular means of raising cash is crowdfunding, in which individuals provide donations -- rather than loans -- through platforms such as Kickstarter and Indiegogo.
Lending Club says it has facilitated nearly $1.7 billion of loans since its inception, including $140 million of loans last month alone. About 80 percent of borrowers, according to Lending Club's website, use the loans to pay off their credit cards or consolidate other debts. Roughly three percent, or nearly 3,900 people, have put the funds into their business.