Are Clouds Clearing for Marketplace Lending?

canstockphoto37527437Marketplace lending space has been through a rough patch lately. Has that affected the volume of investment?

Absolutely, but not drastically, according to Pat Grady, partner at Sequoia Capital. “I wouldn’t call it a drought, but more calling off the herd,” he said at the Future of Fintech Conference yesterday. “But not all lenders are created the same, and we’ll see some of the more established platforms continue to have great business that will get funding,” Grady added.

On the other hand, investors have started (and will continue) pulling out of companies that have failed to establish “core competence,” he said, resulting in either shutdowns or consolidations.

We have been quiet in the space recently, but we plan to be very very active in fintech too in the next three years. I think the risk has been undervalued, while upside has been overestimated. Those companies that think fintech is easy money, will go away. People who have identified real problems, and created solutions, will stay and we want to do business with them.

Some credit Lending Club for a lot of the noise around the state of marketplace lending today: from the CEO resignation last month, to an impromptu cancellation of its annual shareholder meeting this week (the company said in a filing it was “not yet in a position to provide its stockholders a complete report”).

The industry players, however, insist that individual company behaviors should not be elevated to the market level. Speaking on the same panel, Ron Suber, president at Prosper, compared the marketplace lending experience to that of using Uber and AirBnB: “great online experience, at the right price, and you never go back.”

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