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Social lending is getting increasingly mainstream media coverage. As Rate Ladder reported yesterday, peer to peer lending received prominent placement in Forbes Magazine and CNBC over the last few days.

Our CEO, Renaud Laplanche, was interviewed on CNBC’s Power Lunch program earlier this week to explain how social lending is helping people across America lend and borrow money at better rates.

A week earlier, CNBC’s The Big Idea with Donny Deutsch had a segment that highlighted person-to-person lending as a great financing alternative. You can read about that segment on The Big Idea Blog to get their take on social lending, and on Lending Club in particular.

To round up the week, we were pleasantly surprised to find that Lending Club was mentioned in the cover story of last week’s issue of BusinessWeek.

Social lending is rapidly gaining mainstream adoption, and this is excellent news for the Lending Club community.

Better Rates. Together.

Going beyond Facebook has sparked quite a lot of press and the interest of more users, most of whom are unfamiliar with P2P Lending. Along with the opening of our website, we have also received several requests to expose raw data and performance statistics about loans and lenders. We believe this is very important in order to maintain full transparency and allow users to see the benefits of Lending Club for themselves. While we work on ways of exposing this information in a private, secure and efficient manner, we have already taken some steps in this direction. Here are some datasets we have made available:

Top Lenders by Performance

The Lender Rankings page contains a list of the top 100 performing portfolios (one per lender) containing at least $50, in order of estimated return on investment. Lenders are identified by screen name to protect their privacy. The table displays the following information:

• Portfolio rank

• Lender screen name

• Portfolio name

• Amount of initial investment

• Estimated return on investment

Click to Enlarge Image

Calculation of estimated return on investment

The estimated return on investment is calculated by taking the average interest rate of a portfolio and deducting the Lending Club servicing fee, defaults and late loans expected to default.

• The average interest rate excludes the origination fee for each loan (origination fee varies according to each loan grade)

• The late loan amount is calculated by deducting monthly payments already made from the principal

• Loans more than 1 month late are estimated to default at a 50% clip

• Default losses (projected defaults for late loans and actual defaults) are calculated using a 90% clip (10% recovery rate) for default loans

• Paid/repurchased loans are included in the current average interest rate calculation. This may change in the future

• The late/default rates are projected out to one year

• Lending Club servicing fees are 1% for all loans

• All loans are included in the calculation for late/default rates in the formula regardless of age

Formula:

Estimated ROI = Average Interest Rate - (Loss due to Late Loans - Loss due to Default Loans) - Lending Club Servicing Fee

Where:

• Loss due to Late Loans = Sum(50% * (unpaid percentage) * (interest rate of the late loan))

• Loss due to Default Loans = Sum(90% * (unpaid percentage) * (interest rate of the default loan))

• Lending Club Servicing Fee = 1% / 3 years = 0.33%

For those that want to use this information as input to other computations, we also expose this information via a downloadable XML file (available here) that gets updated daily.

Member Map

Available directly on our homepage, this feature displays information about current lenders, borrowers and issued loans plotted on a Google Map. Members are identified by screen name, and location is based on zip code only (with a certain level of Geocode randomization) to ensure members’ privacy. When an icon is clicked, a call-out displays the following information:

Borrowers / Issued Loans	Lenders
• Screen name	• Screen name
• Title / Link to the loan page	• Amount of portfolio initial investment
• Amount of the Loan	• Location (city, state)
• Amount left to fund
• Location (city, state)
Click to Enlarge Image	Click to Enlarge Image

This information is also available in XML format for external consumption here, and the file is updated on a daily basis.

As noted, we will be releasing additional data in the near future. Meanwhile, we hope the above information will be helpful to those who are evaluating Lending Club.

Better Rates. Together.

Prior to Norwest, Jeff served as President, COO and board member of DoveBid, Inc., a privately held business auction firm, which expanded during his tenure via internal growth and acquisition from a $10M revenue run rate to a $120M revenue run rate with 400 employees. From 1990 to 1999, Jeff was co-founder, President, CEO and Board member of Edify Corporation, a venture backed enterprise software company focused on voice and internet e-commerce platforms and applications. Edify held its IPO in 1996 and was sold to S1 Corporation in 1999.

1. Jeff, how do you think p2p lending will change the face of consumer lending?

Person-to-person (p2p) lending will be an important driver of change in the world of consumer lending, because the economic model of p2p lending is significantly more efficient than the traditional business models of banks, credit card companies and other institutional lenders. That improved efficiency enables better interest rates for both individual borrowers and individual lenders when they participate in a p2p lending transaction. So as awareness grows among consumers that they can both borrow and lend at more attractive rates, we believe that demand to participate in a p2p lending platform such as Lending Club will explode. Today, the overall markets for consumer lending in the U.S. are enormous, so p2p lending has tremendous room to grow from its current small base before it will seriously impact the operations of large consumer lenders. But you can be sure that banks, credit card companies and other consumer finance companies will be paying very close attention to the growth of the p2p lending category -- they know that they will have to deal with p2p lending more and more as time goes by.

2. Are you a lender or a borrower in Lending Club?

I am a lender on Lending Club. It was a very straightforward and easy experience over the internet. I registered as a lender on Lending Club via Facebook, entered a total amount that I wanted to lend, and decided on an overall risk profile for my loans. Then Lending Club's software automatically generated a potential portfolio of roughly 20 loans and suggested amounts for me to fund for each loan. I had the opportunity to look at each borrower's profile, including their job, income, debt level, credit history and reason for borrowing. From the suggested loan portfolio, I picked out the loans that I wanted to fund, adjusted the amounts that I wanted to fund or stayed with the suggested funding levels, and hit the submit button. It was as simple as that. Lending Club then automatically deducted the funds from my account and set up my account to automatically receive the loan repayments from the borrowers. My current portfolio is yielding over 13% -- a lot better than money market funds.

3. Did the Lending Club deal ruin your summer vacation?

Norwest Venture Partners was very excited to invest in Lending Club, and we wanted to make sure that we kept the investment decision making and due diligence process moving forward in a timely fashion over the course of the summer. I had a long scheduled summer vacation that landed right in the middle of our investment process, but we had to keep going on closing the investment, vacation or not. This meant daily phone calls and emails from our vacation spot. I would not say that it quite ruined the vacation, but I can say that everyone in my extended family now knows Renaud!

Prior to joining Canaan Partners, Dan Ciporin was CEO of Shopping.com, where he oversaw the company's growth from zero to over $100 million in revenues in just 5 years, culminating in the company's initial public offering in October 2004. Shopping.com was the third largest ecommerce site on the web before it was acquired by eBay in August of 2005.

1. Dan, what prompted you to invest in Lending Club?

The consumer credit market is an absolutely gigantic market and yet paradoxically one of the few sectors that has not yet been completely upended by the internet. I think the Lending Club approach to consumer lending is not only a great disintermediation approach in a large, established market sector but also through the focus on affinity relationships takes what has been proven to work on the web and applies it uniquely to the lending marketplace.

2. What makes the person-to-person lending space attractive from your point of view?

P2P services and functionality in general has been at the heart of web market disruption, from Ebay to MySpace to Facebook, using only a few of the most prominent examples. I think the opportunity is ripe now to apply P2P functionality in the consumer lending space, especially with the particular focus on pre-existing affiliations that Lending Club has.

3. Tell us more about your background and how it is relevant to Lending Club.

Prior to my experience as CEO of Shopping.com, which we viewed not only as a price comparison service but more importantly a complete facilitation mechanism for the entire purchasing process, I was a senior vice president at MasterCard International. Working in the "traditional" consumer credit market was a first-hand opportunity to view the enormity of influence this market has throughout the economy, and how important even relatively simple product innovations can be in building and maintaining a customer base.

More directly relevant to Lending Club, one of the innovations we worked on at MasterCard was in helping to develop the affinity/co-branded market for credit cards, an effort that ultimately proved to be a huge success for us. I have seen how effective affinity relationships can be in 'traditional' consumer lending, and I think that Lending Club can take this same kind of innovative approach in the massive consumer credit market with even more compelling results.

As reported earlier yesterday afternoon, we are thrilled to announce that Norwest Venture Partners and Canaan Partners invested in the Company as part of a total $10.26MM investment round. Jeff Crowe from NVP and Dan Ciporin from Canaan Partners are joining the Company’s board of directors.

We launched the company as part of the Facebook F8 platform on May 24 and since then have issued $750,000 in loans among Facebook users. Launching on Facebook made sense: we believe that person-to-person lending will grow faster in an environment where people feel connected to each other, and Facebook offers the perfect environment for this with friends, groups and networks. Facebook Lenders can build a “portfolio” of loans based not only on credit profiles but also based on their connections to the borrowers (attended the same school, worked for the same company, etc.).

Facebook now has over 6 million active user groups which are prime targets for financial services. However, Facebook users are younger than the average online population, and our strict screening criteria (640 minimum credit score, less than 20% DTI) led us to decline about 75% of all applications, as younger borrowers tend to have a lower FICO score. We are coming up with new tools to help the “declined” borrowers understand the importance of good credit and take specific actions to improve their credit score.

We will be using the funds to expand beyond our current Facebook application. Stay tuned for interviews with Jeff Crowe and Dan Ciporin on this blog later this morning.