Ousted Lending Club CEO Laplanche launches rival platform
06 April 2017 | 5334 views | 1
A year after being forced out of Lending Club, the firm's founder Renaud Laplanche is back with a new online lending platform and $60 million in financing.
Last year Laplanche was forced out of Lending Club, which he founded in 2006, after an internal review found that $22 million in near-prime loans were sold to an institutional investor that did not want them. The application date on $3 million of the loans was altered to make them look like they met the investor's requirements.
Laplanche also faced questions about an undisclosed investment he made in a company, called Cirrix, which buys Lending Club loans.
The scandal prompted a Department of Justice probe while the New York Department of Financial Services also looked into the lender.
Less than a year later, Laplanche is back with a Lending Club rival called Upgrade, a "consumer credit platform that combines a marketplace lending approach with tools that help consumers understand and monitor their credit".
Personal loans are available through the Upgrade website starting today, with credit monitoring, alerts and education features arriving in the next few weeks.
A Series A funding round has raised $60 million in equity and convertible notes from investors including Apoletto, Credit Ease, FirstMark Capital, Noah Holdings, Ribbit Capital, Sands Capital Ventures, Silicon Valley Bank, Union Square Ventures, Uprising and Vy Capital.
The new company claims to use cutting edge technology to risk management, servicing operations, compliance management system and internal controls. Blockchain protocol will be used to enhance data integrity by creating time-stamped, immutable transaction records.
"We are thrilled to be backing Renaud again, after having worked alongside him at Lending Club for many years. We trust his judgment and integrity, and we think he's assembled a fantastic team at Upgrade," says Fred Wilson, managing partner, Union Square Ventures.