The more I talked with Barlow on how his seven-person Eaglewood Capital did this $53 million deal, the more it became clear that mammoth ramifications loom as equally big investors take to peer-to-peer lending. "We assembled our portfolio in a way that is similar to how many investors would use peer-to-peer lending like Lending Club," he said. "But we took a very sophisticated approach to our loan selection process that opens the asset class to larger investors." Over the past year, he and his partner, Steve Lee, created an algorithm that works hand in hand with existing peer lending platforms to automatically identify loans meeting the criteria for institutional lenders. Those loans are funded by a single large pool of investments controlled by Eaglewood that so far runs north of $100 million. This pools earns return just like normal peer-to-peer loans, as lendees, who have 700-plus FICO scores and average borrower income of more than $90,000, pay off their loans in fixed payments over 36 months.
Believe it or not, Barlow's fund is only the start of the change coming to peer-to-peer lending. The next issue is how will big investors such as Eaglewood affect little investors who share the same service. Lending Club CEO Renaud Laplanche was adamant when I spoke with him this summer that his platform can be a tool for big and small investors alike. And Barlow clearly shares that sentiment. "We believe we can add value on the loan selection process for a specific type of larger investor by overlaying our proprietary selection process without affecting what the smaller lender does," he says. Those who study the space are seeing changes already altering the peer-to-peer market. "I am definitely seeing loans getting snapped up faster on the platform," said Peter Renton to me in an email this week. He is founder of Lend Academy, the San Francisco-based peer lending research and training firm. Renton confirmed the demand for new loans is high but said, "Funnily enough, I am having an easier time deploying money today than I did three months ago." Either way, the personal world of one person lending to another via the Web is about to get more crowded. "You have to know what you are doing," Renton said. "And be very quick." Big fish are making big waves in the peer-to-peer lending seas.