Lending Club and OnDeck Capital both went public at the end of 2014, as two of the original “next-generation” lending companies, and this marked a pivotal point for the fast-changing lending industry. In fact, in 2014 investment activity to lending startups exploded, with over $1.5B raised in equity financings across 48 deals, the highest annual totals for the industry. And that pace does not look like it is slowing down as Q1’15 saw $389M raised across 18 deals, including $200M to Unicorn Social Finance (see every unicorn on our real-time Unicorn Tracker).
Not only was 2014 the biggest year for funding to next-gen lending companies, but also for new entrants, as 24 new lending startups raised their first round of equity financing. Sixteen (67%) of those companies were international, including six based in China, a country which has seen its P2P loan market boom from $30M in 2009 to $930M in 2012, and is expected to top $7B in 2015. On the funding side, despite multiple bankruptcies, Chinese lending companies have raised over $300M in equity financing since 2013, including eLoancn and Renrendai which each raised $100M+ financings in 2014.
The chart below shows the number of next-gen lending companies to raise their first equity financing per year. Notably, three of the four lending companies which have achieved a $1B+ valuation received their first funding rounds before 2008, with only Social Finance, which raised $200M at a $1.3B valuation in February, coming after the financial crisis.
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