Eddie mentioned before that he was stepping away from Lending Club (http://www.wallstreetoasis.com/blog/stepping-away-from-lending-club). One of the factors was looser underwriting / servicing of the borrower.
Meanwhile, Google is stepping up with a $1.6 billion valuation*(http://www.forbes.com/sites/parmyolson/2013/05/02/google-buys-stake-in-…). I really wonder if the news Thursday morning regarding negative rates from Draghi, got Google thinking, people need to invest some where. I am sure there is more of a reason such as Google seeing an opportunity in the site and P2P lending.
Anyone have any thoughts? To me it just seems ludicrous for a company that only did $16 million in sales last year. Then again, there is definitely potential, just not sure if I would pay $1.6 billion ( I mean it is only 100x its current sales)
Read the article again...
Or just that bad a day at work that you read it hour earlier.......yet still feel need to make a snide remark.
Google AND Foundation Capital, together, bought in for $125mm. Based on that valuation, the company is worth $1.6Bn if the remaining shares were taken out at that price, but Google did not pay $1.6Bn
xoxo
Your original article said that Google was buying it for 1.6B which is why I said that in the first place
The thing I find particularly interesting about this doesn't necessarily have anything to do with Lending Club. It's just how much of today's market happens behind the scenes. Does the public market even exist anymore?
Lending Club didn't need any funding and didn't get any out of this deal. This was all early investors getting liquid. Normally that would require an IPO where the public would have a bite at the apple. These days every fucking cent of value is wrung out of a company before the public is allowed to touch it. Just look at Facebook.
Eventbrite's another great example. I met with Renaud not 45 days ago and specifically asked him about IPO plans and he told me some time in 2015. Great. Did he mention that they were closing on a $60 million round a couple weeks later? No. I understand the money is for international expansion, but this is something that was always done in the public markets.
Not hating on Lending Club, btw. Those guys are great and deserve all the success that comes their way.
Good point in terms of when deals seem to be getting done. Almost like many of the PE shops and hedge funds using IPO as refinance process for the next private buy. Always this way, but just seems to be more so and with valuations sky high.The ability for a tech firm to get capital seems too easy and it seems all tech firms that IPO are doing so after they are completely matured and do not need of capital, except to cash in profit(aka restart refinance process/profit). Twitter should be really interesting.
My question is what is even the point of being public today? The seven figure annual costs and personal liability make it seem like a worthless pursuit, plus you have to manage your company with a short horizon.
Valid points and I especially see it with the short term time horizon argument. But, attractive capital markets access is invaluable to most companies, particularly those with high capital intensity/working capital needs. If this becomes a major trend then I think the secondary private market will become increasingly quasi-public with more regulation/governance etc.
For a company like Dell, though, that is well-financed and suffering from apparent secular decline, I think it makes all the sense in the world to go private right now and not have to answer to the public every three months about how much your PC demand has tanked. Go fix the business behind a shroud and then you can always IPO at an ostensibly higher valuation down the road. I love the Neuberger Berman story-IPOed for the first time in 1999 after sixty years as a private firm, sold themselves to Lehman in 2003, MBOed in 2008 and took private again, now they are talking about IPOing in the not so distant future. The principals of that firm must be stupid rich.
Someone has to get liquid at some point. Valuations will come down if a liquidity event is less likely.
Ok, do it through private equity or the secondary markets.
@TechBanking I completely agree. We just need to do away with arcane regulations and open the private market to everyone.
I think he read the newspaper. Had a cigar. Drove to work in his Ferrari and just said Yes to the first person he saw.
Also, the article says they did $34 million in sales last year...
In the event of default, do you as the "lender" have access to the borrower's assets?
No. Zero recourse loans.
xoxo
Somebody got their poor widdle feewings hurt and is throwing monkey shit at all my posts... So sadz...
xoxo
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