Upgrade

In July 2011, we were fortunate to lead the Series D financing round in Lending Club, founded in 2006 by Renaud Laplanche. Along with Zopa (UK company) and Prosper, Lending Club was a pioneer of the now-familiar marketplace lending model, which cut interest costs for high quality borrowers by as much as 50% (not a typo) and at the same time offered investors attractive risk-adjusted returns not available elsewhere. This was a fundamental innovation in financial services that is thriving globally and will continue to gain in importance.

During the next four years, we watched Renaud and his team execute extremely well, growing from $20mm a month in originations at the time we invested to $500mm a month when Lending Club went public in December 2014. Lending Club originated over $20 billion in loans to over 2 million borrowers, saving consumers substantial amounts. Scaling a company at this rate is very difficult. Renaud and his team did as good a job as we have seen.

In retrospect, Lending Club probably went public too early. Financial services companies are held to high standards in the public markets these days, regardless of size or vintage. In May 2016 the company faced compliance issues and Renaud left the company, a difficult and unfortunate event for all involved.

Today, Renaud and his new team are announcing the launch of Upgrade, a new marketplace for consumer credit. We think of it as Lending Club 2.0 and are excited to be Series A investors in this new venture, along with our friends at VY Capital, Sands Capital, FirstMark Capital, Ribbit Capital, Silicon Valley Bank and others.

In our view, we are still in the early innings of the marketplace lending model. We believe Upgrade’s team and business plan makes it well positioned to quickly become a leading company in the industry, benefitting both borrowers and lenders. We look forward to helping Renaud steer his ship once again.

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