Cumulus Funding at LendIt 2014: Inspiring P2P Ideas.

This year Cumulus Funding was in attendance at Lending Club’s annual LendIt conference in San Francisco. More than 100 companies dedicated to innovation in alternative lending, peer to peer lending and income share agreements met to look into the future of our fast-moving category.

The conference started with a big announcement: Lending Club, the biggest P2P lender, announced a “strategic alliance” with Union Bank, one of the nation’s 20 largest banks. Initially, Union Bank will purchase personal loans through Lending Club’s platform. Eventually, the two companies, both based in San Francisco, will create new credit products for their customers.

Also that day, Prosper Marketplace, the second-largest P2P lender, said it has raised an additional $70 million in venture capital. The new funding comes from Francisco Partners, Institutional Venture Partners and Phenomen Ventures, according to SF Gate.

Peter Renton writes on “There was a palpable feeling of excitement, I think in part because most people here did not consider this to be just another conference. This industry is new and different and for many people, myself included, this is more than a job – it is our passion. It was this shared passion that made LendIt 2014 a special conference.”

And Renton goes on to explain some points from Renaud Laplanche of Lending Club, “namely that Laplanche introduced the term ‘marketplace lending’ to describe the industry – peer to peer lending is no longer accurate.

Some new themes came from Ron Suber of Prosper:

Prosper is working on taking away the speed advantage of investing through the API. “That game is over,” says Suber.

Also from Ron Suber: “Prosper is not interested in derivatives or synthetic products for this asset class.”

Renton then offers some bullet points on day two of the conference:

  • Michael Barr implored the platforms to take the high road when it comes to transparency and education – this will help prevent any further regulatory interest.

  • All of the major European p2p lenders are moving from a purely retail investor focus to a mix of retail/institutional investors.

  • In China 65 percent of personal savings are in bank deposits collecting minimal interest – this is one of the main reasons why p2p lending is exploding in China.

  • Lendvious is a new aggregation platform that wants to be the Kayak of p2p lending.

  • By 2025 Charles Moldow of Foundation Capital says that marketplace lending will be a $1 trillion industry globally.

And the San Francisco Business Journal weighs in with this summary of the event, which drew some 900 people in person and another 2,000 online: “The deal with Union Bank is a first for an online lender but is expected to be followed. More players in traditional banking may decide they can take advantage of their low-cost capital base to make loans through Lending Club’s platform without the expense of underwriting and servicing those loans.”

Throughout the conference, Renton notes, innovation in P2P was key:

  • Credit is changing from a manual process to an automated and efficient exchange.

  • We need to further the education, awareness and understanding of borrowers. This is the competition today – not banks.