LendingCrowd Review: Platform Health
LendingCrowd has had a busy couple of months. The Edinburgh-based peer to peer lending (P2P) platform launched a TV advert (#ThinkOutsideTheBank), closed a funding round of £2 million in March and just beat its monthly lending record, facilitating £3m worth of business loans in May. The stability of a P2P platform is a primary consideration for investors and is something which has been brought to the forefront recently after Collateral UK – a fairly established lender – collapsed earlier this year. In this post, we’ll conduct a LendingCrowd review look to more closely at the platform’s lending, the people behind the business and the future potential in light of these recent milestone events.
LendingCrowd Review: Growth Signals are Strong
2017 was LendingCrowd’s best year by far in terms of origination. Of the £34.57m worth of capital cumulatively lent since formation, 46% originated in 2017. Furthermore, year-to-date (25th May) £10.27m has been lent to UK businesses across the platform, representing 30% of the overall loan book – signalling a record breaking year in 2018.
Chart 1: LendingCrowd Amount Lent and AUM (correct at 25th May 2018). Source: Orca Analytics
It’s important to remember that the majority of loans are still in circulation with principal outstanding, which will have an effect on the performance of the loan book – loans in their infancy have a greater chance of defaulting as they progress through their term.
|Total (£)||% Overall Loan Book|
|Total Principal Outstanding||£25 million||72%|
|Total Principal Repaid||£9.57 million||28%|
LendingCrowd Review: Key Information
|FCA Permission||Fully Authorised|
|Account Types||Self-Select, Growth, Income|
|Bid Type||Autobid and Manual|
LendingCrowd offers a range of products, catering to passive and active strategies.
The Self-Select Account allows investors to manually select loans to invest in, returning up to 14% per annum.
The Growth and Income accounts automatically spread an investor’s capital across the loan book. As the titles suggest, the Growth Account enables capital growth with all returns re-invested, while the Income Account delivers interest repayments into a separate account to be withdrawn. The returns range from 5.6% - 6% p.a (at time of writing).
LendingCrowd Review: Key People
|Adrian Innes||Head of Origination|
|Ian Cunningham||Head of Credit|
Stuart Lunn – Stuart is an experienced equity analyst having worked at City firms such as Collins Stewart and Cenkos. Stuart is responsible for the overall management and strategic vision of LendingCrowd.
Bill Dobbie – Bill is an experienced entrepreneur and director specialising in internet, telecoms and technology businesses.
For more information on team, visit LendingCrowd’s ‘Meet the Team’.
Equity Investment Round Sets up Landmark Year
LendingCrowd closed a funding round of £2 million in March of this year. The round was led by Scottish-based angel syndicate, Equity Gap. Other participants in the round include Scottish Investment Bank and a number of private investors.
The funding will contribute to the P2P platform’s growth objectives, with funds primarily allocated to sales and marketing in order to increase investor numbers.
Taken from LendingCrowd’s press release, Stuart Lunn (CEO) commented:
“Having laid solid foundations for the business over the last couple of years, we now have a position in the market that is starting to pay dividends. We have a strong pipeline of both investors and SME demand and with such a strong trajectory, we are now actively speaking to the venture capital and private equity communities about our next phase of growth.”
Moreover, the Scottish Investment Bank has also agreed to invest £2.75m in LendingCrowd loans. Kerry Sharp from Scottish Investment Bank commented:
“We are delighted to provide continued support to LendingCrowd who have demonstrated real market traction with their innovative peer-to-peer lending platform in Scotland.”
The fundraise aptly dove-tailed with the platform’s first TV advert which centred on Geoff who decided to “Think Outside the Bank” having become disillusioned with the low returns offered on investments made. This sentiment accurately represents the motivations of many investors in peer to peer lending; fed up of poor returns at their bank. As a recent product provider ourselves, we at Orca have found this to be true, but also a strong driver for introducing P2P into investors’ portfolios is greater diversification, particularly away from more volatile asset classes, such as equities.
LendingCrowd has made strong in-roads into the UK P2P market since forming in 2014, largely attributed to major achievements experienced in the past year. Origination increased significantly in 2017 (3x on 2016’s total lending volume) and a landmark funding round has given the platform a great opportunity to capitalise on its recent achievements.