Lending Club and Prosper have had the p2p lending market pretty much to themselves for several years now. While it wasn’t in my 2014 predictions I do think that this year we will see some new players gain some traction. And one of these players could well be CircleBack Lending.
CircleBack launched last July and have been in a beta period since then. Now, they are coming out of beta and are about to get serious after announcing today a new $1.9 million equity funding round. I did an email Q&A with Michael Solomon, CEO of CircleBack, today to get some more insight into their platform.
Lend Academy: How much loan volume did you do in 2013?
CircleBack: We originated a little over $200,000 in loans last year during our beta testing.
Lend Academy: What are your projections for 2014?
CircleBack: Our goal is to be around $40-$50 Million per month a year from now.
Lend Academy: What is the minimum investment?
CircleBack: The current minimum commitment is $1 million per month. We have a few preferred third-party funds that we can refer smaller investors to.
Lend Academy: Is it whole loans only? If not what is the minimum per loan?
CircleBack: We are only offering whole loan purchases at this time.
Lend Academy: Can investors pick and choose loans like at LC and Prosper?
CircleBack: Right now we will be automatically matching loans to investors so they each receive a platform-wide allocation.
Lend Academy: Are you developing an API?
CircleBack: Yes, an API is available to our investors, but not to the general public at the moment.
Lend Academy: What is the minimum borrower FICO?
CircleBack: Minimum FICO score is 660.
Lend Academy: Average loan size?
CircleBack: We expect our average loan size to fall around industry averages.
Lend Academy: Split of 36/60 month loans?
CircleBack: So far 36-month loans have comprised 44% and 60-month loans 56% of our volume. Of course the sample size is limited at this point.
Lend Academy: Are you using Transunion, Experian or Equifax?
CircleBack: We use TransUnion.
Lend Academy: Where are you open for borrowers ?
CircleBack: We are currently available in Georgia, New Mexico, West Virginia, and Wisconsin. Within the next few months we will be adding about 20 new states and continue to add states as we go.
Lend Academy: Finally, what differentiates you from Lending Club and Prosper?
CircleBack: We have several competitive advantages/differentiators:
- All our loan volume goes to institutions only (no retail investors to compete with) so our investors are able to capture 100% of the deal flow and this will equate to meeting the larger demands of this group as we scale (I know that might not make some of your audience happy).
- Loan process is optimized to minimize cash drag (loans are immediately matched with investor cash and all verification steps are taken in advance so no “cancelled listings” and no long “listing periods”).
- 200+ borrower/loan attributes available in investor portal so you don’t have to build your own API to access full datasets; also can create unlimited custom list views of loan portfolio and transactions in the portal
- CircleBack team is 100% dedicated to serving the institutional investor, no marketing or customer service time to retail market
- No SEC filing requirement for loan offerings makes us more efficient operationally and also allows for a more private marketplace
- Our technology—from front end to back end—is set up from day 1 to be highly scalable
So, there you have it. Circleback have a clear mission although we can’t really call them a p2p lender – they fall under the more generic online lending umbrella. And they are certainly not for individual investors.
While I think it is good that institutional investors have another option with CircleBack I don’t know if their competitive advantages over Lending Club and Prosper are that compelling and they have certainly set themselves some lofty goals. Regardless, given the huge investor interest in the market right now I would be surprised if they are not successful in gaining some traction this year now they have this new funding round under their belt.
I do congratulate them on closing this first funding round and hope they can turn into a major player. You can read their official press release here.
