The most prominent blogger covering peer-to-peer lending is trying his hand at investing.
Peter Renton, who created Lend Academy in 2010 to write about companies such as LendingClub Corp. and Prosper Marketplace Inc., is raising about $28 million this year for Lend Academy Investments LLC. He’s seeking funds for the New York-based firm, starting today, with co-founders Jason Jones, a former hedge-fund manager, and Bo Brustkern, a valuation expert.
Renton, 47, attracts about 20,000 visitors a month to his website by providing news and advice on peer-to-peer lending, which has gained popularity through connecting borrowers and investors via the Web. Renton and Jones are also co-creators of the LendIt conference, which debuted in New York in June and attracted more than 300 investors thirsting for annual returns that have exceeded 9 percent.
“About two years ago, I started getting e-mails from people saying I’d love for you to manage my money,” Renton, who has been investing his own funds in the asset class since 2009, said in an interview. “They were saying -- I love the idea of peer-to-peer lending, but don’t want to do it myself.”
Lend Academy will offer a fund of diversified loans from LendingClub, Prosper and business lender Funding Circle Ltd., with plans to add more providers, Renton said. The firm is aiming to raise $100 million from investors by the end of 2015.
At LendingClub and Prosper, borrowers can apply for a loan of as much as $35,000, payable over three or five years, to finance everything from credit card debt to a honeymoon. The companies perform due diligence using technology. When borrowers are accepted, the loans get listed on websites for individuals and institutions to back.
While the lenders initially attracted retail investors, the returns have lured big institutions and hedge funds. LendingClub projects returns of 5.4 percent to 9.4 percent
“Peer-to-peer investing is at an inflection point,” Brustkern said. “The track record, technology and service providers necessary to attract institutional investors are in place so now platforms like Lending Club, Prosper and Funding Circle are being flooded with institutional money.”
By 2016, peer-to-peer lenders in the U.S. will be originating $20 billion in loans annually, Jones predicted at the June conference. LendingClub’s loan originations more than doubled in the third quarter to $567.1 million from a year earlier. Prosper’s loans also rose more than 100 percent to $94.8 million in the period.
Lend Academy is opening a fund available to anyone as well as separately managed accounts. The firm will offer a low-risk product with returns of about 5 percent, a balanced offering with returns of about 7.5 percent, and a riskier option that aims for 10 percent, Renton said. Lend Academy will charge fees of 0.95 percent to 1.5 percent and won’t keep any of the gains, returning them all to investors.
For the separately managed accounts, Lend Academy is working directly with Prosper to let investors buy a cross-section of loans on the service. LendingClub has its own similar service, called LC Advisors.
As for blogging, Renton said he won’t change his approach. He’s transparent with readers about his investments and tells them upfront that he’s not an objective analyst.
“I’m a cheerleader for this space,” Renton said. “I want to remain a source of news and education, but I don’t pretend to be a journalist.”
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