Lending Club, the peer-to-peer loan firm, recently announced Google and Foundation Capital bought $125 million of the firm’s shares on secondary markets (that is, from previous investors—not newly issued stock) for three times the stock’s valuation a little less than a year ago. Lending Club says their system has funded $1.7 billion in loanssince inception and, according to TechCrunch, the firm hopes to go public by 2014.
It’s the latest in the rising fortunes of a method of lending and borrowing many believe will upend the traditional bank-centric model—made possible by now-pervasive information technologies like PCs and the Internet.
Examples of other peer-to-peer businesses include Airbnb (lodging),Kickstarter (project funding), and TaskRabbit (to-do lists). The peer-to-peer lending model arrived five years ago, and, after some early turbulence, seems to be hitting its stride now. Lending Club boasts board members John Mack, previously chairman and CEO of Morgan Stanley, and Larry Summers, an economic advisor in President Obama’s cabinet until late 2010.