2011 Was a Phenomenal Year for P2P Lending

Well 2011 certainly went out with a bang at Lending Club and Prosper. Both companies posted another month of solid loan volume increases and their combined total crossed $40 million for the first time. This compares very favorably to the $16.6 million combined volume for December 2010.

The total dollar amount for all new loans funded at Lending Club and Prosper in 2011 was $332.5 million up from $153.3 million in 2010. It will be very interesting to see whether this more than 100% growth can be maintained in 2012, while at the same time providing continued great returns for investors.

Lending Club Issues $257 Million in New Loans in 2011

The world’s largest p2p lender had another record month registering new loans in excess of $31 million in December. This brings their total in new loans in 2011 to over $257 million. This is up over 100% from 2010 when they did $126 million in new loans.

At one stage this month Lending Club had over 1,200 notes available for investors. They really made a big push to attract borrowers in early December that really helped drive this month. They went down from over 1,200 notes on December 7th to under 300 notes after Christmas. The average loan size in December was also a record at $13,678 and that will likely get even higher in January if their new “no fee” policy on loans over $20,000 continues.

It has been quite the year for Lending Club. There have been many milestones in 2011 that Renaud Laplanche, CEO of Lending Club, summarized in an email:

  • In February we launched loans up to $35,000 — allowing borrowers to view us as an efficient alternative to fund projects that previously required home equity loans.
  • In March we launched LC Advisors and our two private funds which have now attracted over $75MM in investment capital.
  • In May we moved into our new home in downtown San Francisco, appropriately sitting between Schwab and Twitter, and allowing us to host meetings with our strategic partners.
  • In August we took on a new equity investment at a substantially increased valuation via a round lead by Union Square Ventures –one of the most well regarded Venture Capital firms in the country.
  • In September we announced Peter Thomson of the Thomson Reuters family as a cornerstone investor in our new Conservative Consumer Credit Fund.
  • Closing out the quarter we were honored to be recognized with several prestigious awards, including being selected as a World Economic Forum Technology Pioneer and named to Forbes’ America’s Most Promising Companies List.

The chart below reflects the kind of year that Lending Club has had. Since February the numbers have just gone straight up and the three-month moving average (the black line) continues to steepen.

Lending Club p2p loan volume Dec 2011

Prosper Has Annual Growth of Over 178%

When Prosper started out the year things looked very different. They had just moved away from the auction platform to a fixed price model and there were very few loans on the platform. In January 2011 the total loan volume was just $3.3 million. Fast forward 11 months and we have a very different picture. This month Prosper recorded new loan volume of $9.5 million.

Worth-blanket2 had their biggest month ever since they came on board in May. According to Lendstats they invested over $4.3 million into Prosper this month, almost half the total loan volume. The next largest investor, as far as I could tell, was Managedfund who invested just $150,000. Obviously Prosper would prefer not to rely on just one major institutional investor but that was the reality in December.

As you can see in the chart below the black line (the three-month moving average) has moved steadily upwards every month of this year. With two funding rounds in the books Prosper is very well positioned entering 2012. When I reached out to Prosper for an official comment about their year this is what they said:

“Prosper has had a tremendous year of annual growth of more than 178%,” said, Chris Larsen, co founder and chief executive officer of Prosper. “I believe the growth we’ve seen on Prosper.com, and in peer-to-peer lending, is proof that borrowers and investors are looking for a better way of banking. Borrowers want an easy way to access affordable capital and investors want direct access to high-yield, risk-adjusted returns. P2P lending represents a win-win for both sides of the marketplace.”

Prosper chart showing p2p loan volume through Dec 2011

One last point about loan volume. from their inception through the end of 2011 Lending Club and Prosper have issued $749.8 million in new loans. On the first day of 2012 they will no doubt cross over $750 million.

  • Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.