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By Anna Irrera
NEW YORK, April 6 Renaud Laplanche, who abruptly
stepped down as chief executive officer of LendingCLub Corp
in May, has launched a new online lender called Upgrade,
the company said on Thursday.
San Francisco-based Upgrade has raised $60 million in equity
and convertible notes from a large group of U.S. investors
including Union Square Ventures, Ribbit Capital, Vy Capital and
Silicon Valley Bank, the startup said.
It said investors also included large Chinese lender
CreditEase and Noah Holdings, an investment management
Laplanche, who founded and took LendingClub public, sent
shockwaves through the emerging online lending industry with his
resignation last year, after the company acknowledged a series
of loan malpractices.
LendingClub, which runs a website where consumers can apply
for loans funded by individual or institutional investors, said
it had altered documentation when selling $22 million in loans
to Jefferies Group. The loans were later repurchased by the
An internal probe also revealed that Laplanche and his
family had taken out 32 loans on the platform in December 2009
to boost the company's volumes just four months prior to closing
a round of venture capital funding.
Laplanche is now making his comeback with the support of
LendingClub's venture capital backer Union Square Ventures.
"We are thrilled to be backing Renaud again, after having
worked alongside him at Lending Club for many years," said Fred
Wilson, managing partner at Union Square Ventures in a
By automating much of the lending process companies like
LendingClub, OnDeck Capital Inc and Prosper are able to
service borrowers that have become too risky or expensive for
banks to lend to from their more constrained balance sheets.
While the sector has continued to expand, growth has
softened, in part because of investor concerns regarding the
quality of the loans.
Unlike LendingClub, loans originated on Upgrade will only be
bought by large asset managers, and not by individual investors.
The loans will be issued by bank Utah-based WebBank and
later purchased by Upgrade. The startup will retain a portion of
those loans on its balance sheet.
It will also provide borrowers with a series of tools to
help them monitor their credit.
Upgrade is being advised on its capital market strategy by
Jefferies, which is also expected to participate in loan
purchases and help kick off the company’s securitization
Co-founded in August with Soul Htite, the CEO of Chinese
online lender Dianrong, the startup is also backed by Apoletto,
FirstMark Capital and Uprising.
(Reporting by Anna Irrera; Editing by Chizu Nomiyama and Tom