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.
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.