Episode Details

This is a mega-episode Xmas present special for London Fintech Podcast listeners   The world of Fintech has changed forever with this month’s successful twin IPOs on the NYSE of Lending Club and On Deck – both with valuations in ten figures.  It’s certainly an epochal shift for Alternative Finance Lending & Borrowing (P2P) around the world.

UK Fintech does not exist in a vacuum and it’s important to understand how other markets are evolving.  Naturally in a world of globalisation the US market and New York in particular are perhaps the most important “must knows” for anyone on the UK Fintech scene.

Above and beyond that the story of the US P2P is a cracker – the more I drilled into it the more that “fact” turned out to be once again better than “fiction” – and in this case more entertaining in terms of the twists and turns on the road.

I am delighted to be joined today by a man supremely able to tell that story from many angles.  As a commentator on the scene Peter Renton has been blogging for several years about the US P2P scene – long before it was hot and fashionable.  As an investor he has been an active participant and experienced its evolution first hand.

From his initial personal interest has grown a range of businesses – Peter is the founder of Lend Academy, co-founder of Lend Academy Investments, and co-founder of LendIt Conference which albeit mostly active in the US, had a very successful recent conference in the UK (you can see some great videos of the UK P2P presentations here) and one this year in Shanghai.  He has written a short, free e-book on the US P2P market which is freely available for download here.  He – clearly a busy guy – also finds the time to fit in a great podcast on the US P2P scene (search for “Lend Academy” on iTunes/Android App).

We have a wide-ranging conversation about the history of US P2P, the present and possible futures. We also discuss similarities and differences with the UK P2P market, what the UK market should be grateful for – and we don’t actually discuss where it’s falling behind – but how many UK multi-billion IPOs were there in December?

Threading through this is one of the best stories out there about US P2P.  Superficial surfers might be tempted to think its just “the same old” US tech success story. Partially maybe.  However “Fintech is not Tech” is one of my mottos and the US P2P has trodden one of the more challenging and thorny paths to the floor of the NYSE (where Peter was as a special guest of Lending Club).

As we know P2P was invented in the UK by Zopa in 2005.

Prosper was the first major US player closely followed by Lending Club.  Interestingly (and rather lost to the mists of time perhaps) their origins were very social in nature – so for example on Prosper you could post a photo of yourself, have online usernames and all that jazz. Lending Club launched as a Facebook App.  Now the majority of US P2P funding is institutional in origin – quite a journey.

The crash hit the US P2P scene very hard (in part due to exposures to lower rated borrowers).  There was a class action suit against Prosper.  These difficult times continued when the SEC nearly crippled the industry by insisting that every loan that passes through the platforms be regis