Banks Beware: Google Takes Stake in Growing 'Lending Club'

Banks Beware: Google Takes Stake in Growing 'Lending Club'Google has taken a minority stake in Lending Club, the peer-to-peer site that lets people take out personal or business loans at lower rates than credit cards, as long as they have good credit.
Google led a $125 million deal that acquired shares from existing investors. Foundation Capital, a current shareholder, also took part in the transaction.
The latest investment values the fast-growing Lending Club at $1.55 billion, nearly triple the valuation of the last fund-raising round last summer, the New York Times reported.
Google, which has knack for catching the right trend at the right time (Android and smartphones, for example), is no stranger to start-up investing.
But the Internet giant has not ventured into the banking or lending industry. Google Wallet, a mobile payments system, is about as close as it has gotten.
“By allowing our members to directly invest in and borrow from each other, we avoid the cost and complexity of the banking system and pass the savings on to you,” Lending Club says on its website. “Both sides can win: better rates to borrowers and better returns to investors.”
Lending Club said it has loaned more than $1.65 billion, including more than $350 million in the last quarter.
The site beckons potential investors to earn solid returns as reflected in Lending Club’s “23 consecutive quarters of positive returns.”
Are Lending Club-type sites poised to threaten tradition banking circles?
No doubt that Lending Club and Google think its possible, and bankers are keeping an eye out.
“Lending Club is using the Internet to reshape the financial system and profoundly transform the way people think of credit and investment,” said Google’s David Lawee. “We are excited to be a part of it.”
As part of the deal, David Lawee will take an observer seat on the Lending Club Board alongside existing Board members, including Kleiner Perkins’ Mary Meeker, Former Morgan Stanley CEO John Mack and former U.S. Treasury Secretary Larry Summers.
Lawee is the senior Google executive who led the talks with Lending Club. He is Google’s vice president for corporate development.

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