Investing in Financial Technology

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Sept. 17 (Bloomberg) -- Canaan Partners General Partner Dan Ciporin discusses his investment ideas with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

With lending club, people basically bypass banks.

Peers take on the risk.

What made you invest in this company?

Is a marketplace and the internet is enabling marketplaces in germanic fashion.

-- in dramatic fashion.

Borrowers and lenders connect on the lending club platform and they do that without having a middleman, a bank, getting in the way.

So if i need to borrow money, maybe people on the internet will be more understanding than a bank for me.

How much money are they lending?

The average is around $12,000. so it's not a mortgage you no -- so it's not a mortgage.


whether it's student loans, mortgages, the things, it will be enabled by the marketplace in the future.

What kind of concerns do you have as far as regulation?

When you made that initial investment, were you concerned at all that there would be regulatory risk?

We were.

But lending club has been absolutely by the book in terms of regulations and regulatory compliance.

It filed with the sec.

They abide absolutely by the book here it's not so much about lending club.

I know investors who say i am not getting anywhere near contact because it is so hard to get anything off the ground and there are tons of other sectors that don't have as much regulation and that is just a big hassle.

That is a very important point.

In the financial services arena come he cannot just have technology.

You have to combine that with an emphasis on regulation and regulatory compliance and having an infrastructure to support compliance with all regulations.

That is important.

Lending club is not a loan now.

What are you helping them do now?

You are on the board.

We have a really dominant position, almost 10 times the next u.s. competitor in terms of loans originated.

We will do this year over $2 billion in loans originated and that is up from nearly zero just a few short years ago.

We think we are in a gray and dominant position.

So you're not that worried about it.

That is your job, too worried.

You always worry a little bit about competition, but it is such a dominant force that we think it is in a clear leadership position and will stay that way.

I know you sold a company in your previous life where you are on the other side of the table.

You were an entrepreneur,, and you sold it to ebay for $600 million.

What about that experience prepares you to be a vc and prepared you to be so -- prepared you to have so many fintech companies in your portfolio?

Taking a company from zero to $300 million in revenues, you have seen the movie.

You understand where the earnings are potentially.

You understand where the good endings are.

My job is to help coach, mentor, guide in the best way possible other entrepreneurs who are trained to get to a great ending.

With that in mind, what do you prefer right now as far as the investing environment go?

Do you prefer companies to go public?

At the end of the day, you need an exit.

Or do you think it is better to have strategic partnerships?

We counsel our clients to build the biggest possible business they can.

So don't worry about the exit or worry about it second and.

Companies are fundamentally bought, not sold.

We invest in big visions, big opportunities, big markets and we invest in entrepreneurs who carry that vision with them.

We talked about lending club.

What else is in your portfolio that you think will grow may be quicker than some of the other ones in your portfolio?

We have a number of financial services investments.

Shopkeeper is a point-of-sale system.

It is enabling merchants to take their ipad and use it as a command center for their entire business so they can use it as a cash register and come in a similar way as you would, download an app for it time management, quickbooks, anything.

So that company is doing very well and has solved the than a mental issue in the merchant arena in terms of really enabling -- solved a fundamental issue in the merchant arena in terms of really enabling sales. -- borro.c om really enables you to get credit without any regard to a credit score.

You can get credit simply by virtue of the things you actually own, watches, jewelry, wine, cars.

And you can get immediate credit instantly just by virtue of owning this things.

Question just in case you need to liquidate.

We are talking about this five years after the economic labs.

This text has been automatically generated. It may not be 100% accurate.


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