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Venture Capital Investments Fuel P2P Lending: Lending Club and Prosper

The peer-to-peer lending sector just received an encouraging boost of $40 million in new venture capital. The two primary U.S. P2P lenders, Finovate alums Lending Club and Prosper, recently received venture capital infusions (Finovate videos: here and here). The total invested in the two firms now tops $100 million.

Lending Club raised $24.5 million in a C round from Foundation Capital, Morgenthaler Ventures, Northwest Venture Partners, and Canaan Partners.

LendingClubLogo.pngLending Club says it will use the capital for new loan products, new investment tools, and website enhancements. The company said the funds would also help it reach a larger pool of customers. The lender has funded more than $105 million in loans.

Prosper_Logo.pngIn its series D round, Prosper raised $14.7 million from its previous investors - Accel Partners, Benchmark Capital, DAG Ventures, Meritech Capital Partners, Omidyar Network, QED Investor, and Volition Capital (formerly Fidelity Ventures) - and two new ones, TomorrowVentures, and CompuCredit Holdings.

TomorrowVentures is the investment vehicle for Google CEO Eric Schmidt and Omidyar Network was established by Pierre Omidyar, the founder of eBay. Court Coursey, managing partner at Tomorrow Ventures, will join Prosper's board.

Prosper CEO Chris Larsen said that the funding would help the company bring peer-to-peer lending into the mainstream. The company has nearly one million members and has funded more than 32,000 loans valued at nearly $200 million.

History of VC investment in Lending Club and Prosper

(all dollar amounts in millions)

Investment Round

Lending Club

Prosper1

Angel

Date

May 2007

--

Amount

$2.0

--

Series A

Date

Aug. 2007

Apr. 2005

Amount

$10.3

$7.5

Series B

Date

Mar. 2009

Feb. 2006

Amount

$12.0

$12.5

Series C

Date

Apr. 2010

June 2007

Amount

$24.5

$20.0

Series D

Date

--

Apr. 2010

Amount

--

$14.5

Total:

 

$48.8

$54.5

Source: CrunchBase, April 20, 2010

1. Prosper also raised $1 million in November 2009 by selling a convertible promissory note to QED Investors.

A look at the investors1

Investor

Invested In:

Interests

Founded

 Accel Partners

Prosper

Multi-stage; Internet technology

1983

 Benchmark Capital

Prosper

Early-stage; technology

1995

 Canaan Partners

Lending Club

Early-stage; technology & healthcare

1987

 DAG Ventures

Prosper

IT, energy & life sciences

 

 Foundation Capital

Lending Club

Technology

1995

 Meritech Capital
 Partners

Prosper

Late-stage; IT and medical

1999

 Morgenthaler 
 Ventures

Lending Club

IT & life sciences

1968

 Northwest Venture 
 Partners

Lending Club

Multi-stage; Internet, technology & media

1961

 Omidyar Network

Prosper

Financial & media

2004

 QED Investor

Prosper

Information companies

 

 Volition Capital

Prosper

Technology

2010

 TomorrowVentures

Prosper

Seed and early-stage

2009

Sources: CrunchBase; Caanan.com; Morgenthaler.com; nvp.com; volitioncapital.com

1. CompuCredit Holdings, which invested in Prosper, is not a VC company.

According to Compete, Lending Club had about 90,000 unique U.S. visitors per month over the last two months. Prosper averaged around 150,000 per month for the same period.

LCP_Compete.pngSource: Compete.com, April 21, 2010

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