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Lending Club Now Worth Over Half a Billion Dollars

by Peter Renton on June 19, 2012

When I wrote about the recent venture capital investment in Lending Club a couple of weeks ago the Form 8-K hadn’t yet been filed with the SEC. This is a form that Lending Club must file whenever there is a “material event” that is significant to shareholders – such as a new round of funding.

Back in August last year Lending Club raised $25 million in funding that placed the value of the company at $275 million. This we know because it was publicized at the time by the Wall Street Journal. This time around Lending Club had no comment when I asked them about their new valuation with the recent funding round. So I had to wait until the Form 8-K was released last week.

A Valuation of $7 Per Share

Doing some simple math it is easy to calculate the new valuation. According to the 8-K filed for the $25 million investment last year Lending Club sold 7,027,604 shares which works out at around $3.56 per share. Now, the investment this month was $17.5 million ($15 million from Kleiner Perkins and $2.5 million from John Mack) and according to this latest 8-K there were 2,500,000 shares issued for that total investment. This works out at exactly $7 a share which is nearly double the share price from July of last year.

When you extrapolate the numbers it works out this way. If at $3.56 per share Lending Club was worth $275 million, it stands to reason that at $7 per share Lending Club is now worth around $541 million. That is one heck of a valuation for a company that is still operating at a loss every quarter. Clearly these new investors have tremendous faith in the business model and the ability of Lending Club to not just be profitable but to grow dozens or even hundreds of times bigger than it is today.

Is a Lending Club IPO Coming?

I have seen some chatter about this recently on various blogs and forums but I don’t think a Lending Club IPO is happening any time soon. I don’t have any inside information although CEO Renaud Laplanche has stated several times that they are in no hurry to go public.

One of the positive impacts on going public for Lending Club is that as a public company they would be able to offer their notes to investors in every U.S. state, not just the select 28 states available now for the retail platform. But even so, the additional cost burden of an IPO on a company that still has relatively small revenues I think would be too much right now. And with Lending Club awash in investor money the push to reach investors in all 50 states probably isn’t that strong anyway. If I had to guess I would say there will be a Lending Club IPO in 2014 or 2015 when the company is profitable and probably still growing fast.

Regardless of whether there will be an IPO any time soon, a $500 million valuation is nothing to sneeze at. It continues to give the industry more legitimacy and I am sure even the folks over at Prosper are pleased that Lending Club has attained such a high valuation.

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{ 5 comments… read them below or add one }

Dennis June 19, 2012 at 10:47 am

FYI – Lending Club lost eligibility in Florida for the primary (retail) platform at least 3 months ago. Your color state map (link above) may need updating. New accounts in that state can trade only on the secondary platform (FOLIO) for now. I’ve been told that Lending Club has refiled papers and is expected to be reapproved for Florida soon, but I’ve been told that for 3 months now. Last March I opened an IRA with Lending Club in anticipation of that approval, maybe I made a mistake. I already have a primary account with both Lending Club and Prosper, the IRA is additional. I’ve been told twice now (on 5/10 and 6/04) from a Lending Club representative that reapproval was expected within the week, but that didn’t happen. So here I am in Florida sitting on a fully funded IRA still waiting to invest that money (for 3 months). FOLIO is something I really don’t want to get involved with but I know I have that option. If anyone knows why Florida lost its eligibilty in the first place I’d love to know why.

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Peter Renton June 19, 2012 at 10:18 pm

@Dennis, When I spoke with Lending Club a month ago about the situation in Florida I was also told it would be a matter of days before they were back online. From my understanding the hold up is at the Florida state government end but I have another call into Lending Club to find out more. I will let you know when I hear back.

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Dennis June 19, 2012 at 10:48 pm

Thanks Peter. I’d really like to know what’s going on and why it’s taking so long. Any info is sincerely appreciated.

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Peter Renton June 21, 2012 at 3:07 pm

@Dennis, Just got off the phone with LC. As I suspected the problem is at Florida’s end. They are frustrated because there is nothing more they can do. You not alone. They have several large investors waiting to put in big chunks of money and LC have had to tell them to wait. If you are frustrated and want to do something about it you can always call the Florida securities regulator directly: http://www.flofr.com/ and ask about the Lending Club renewal to sell securities in Florida. Maybe that will help it along….

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C. Jensen June 20, 2012 at 3:44 pm

This is pretty amazing and I can’t wait to see where they are in 5 years. I’ll bet they’ll be a household name.

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