NEW YORK (TheStreet) -- Those seeking good news from the wreckage of a Ukraine-Russia War market should cuddle up tonight with the S-1 for Lending Club. The planned IPO is estimated to be worth $500 million and values the company at $4 billion.
Lending Club is a bank that receives its capital from crowdfunding. People apply for personal loans on one side of the online window, and investors apply to lend the money on the other. At of the end of June the company said more than $5 billion had been lent, drawing almost $500 million in interest.
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Those Buffett-like returns come with whopper-sized risks. Or so it appears. Bloomberg notes that most of the investment capital is coming from institutions, with Lending Club acting as principal to both sides of the loan. Lending Club is turning loans into notes, selling the notes, and collecting on them for lenders. It's a middleman, processing loan transactions on one side, note payment transactions on the other.
So far it is a roaring success. The S-1 shows the company is nearly on target to double its net revenue this year, with $98 million having come in during all of 2013 and almost $87 million coming in for the first six months of this year.
The reason it needs to raise capital can be seen on the expense side. The first six months of 2013 saw $5.9 million spent on "engineering and product development" -- computers and software -- $16 million spent on marketing and $6 million spent serving loans. Spending has since ballooned, to $13.7 million on engineering, almost $40 million on marketing and almost $16 million spent on loan servicing. This turned the first half of last year's $1.7 million profit into a whopping $16.5 million loss, but that's what you do when you're growing fast -- you spend ahead of it.