Lending startups raised a record $1.5B in 2014

Steven Loeb · May 21, 2015 · Short URL: https://vator.tv/n/3de6

24 companies in the space raised their first funding last year, with 16 of those being international

With two lending startups, Lending Club and OnDeck Capital, both going public last year, it seems kind of obvious that the space is starting to mature.

Another sign is how much funding the category was able to rise in 2014. So much, in fact, that it was the most ever for the space, according to data out from CB Insights

In all, over $1.5 billion  raised in equity financings across 48 deals last year, the most ever for the lending space, up from just $382 million in 25 deals in all of 2013. Every quarter of 2014 had a least 10 deals and over $300 million raised. 

Even better for the space is how well it is already doing so far this year. In the first quarter of 2015 there has already been $389 million raised across 18 deals, though it should be noted that Social Finance raised $200 million of that in February, valuing it at a $1.3 billion.

As some of the older lending companies begin to mature, and to exit, there seems to be a new crop of companies springing up. In fact, there were 24 companies in this space that raised their first funding in 2014.

Interestingly, 16 of those 24 were international, and six of the newly funded lending companies were from China, where, as CBInsights pointed out, there has been a ton of activity in the space.

The P2P loan market in China went from $30 million in 2009 to $930 million in 2012, and is expected to top $7 billion this year. Chinese lending companies have raised over $300 million in equity financing since 2013, including eLoancn and Renrendai which each raised over $100 million in 2014.

How does lending compare to other spaces?

Despite all of its gains, the lending space still lags behind other tech spaces.

Investment activity in on-demand mobile services rose 514% year-to-year in 2014, to hit a total of $4.12 billion, up from just $672 million in 2013. And with 39 deals this year, already half the number for all of 2014, and $3.8 billion raised, it is now being projected that venture investment to the on-demand sector is set to more than double in 2015.

Meanwhile, funding for health companies more than doubled year-to-year in 2014. By the second quarter of the year it had already surpassed the totals for 2013, and in the end rose 125% to a total of $4.1 billion. That is significantly higher than the 30% growth rate the space saw in 2013. 

And Ed tech companies raised a total of $1.87 billion in 350 deals in 2014, a record for the space on both fronts.

One industry that is still up and coming is the drone space, where funding more than doubled in 2014 growing by 104%. Overall, $108 million was invested in a total of 29 deals during the year. 

(Image source: picturesofmoney.org)

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Lending Club

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Lending Club is a social lending network where members can borrow and lend money among themselves at better rates.

Lending Club provides a much improved infrastructure for social lending: state-of-the-art technology to authenticate all users (ensuring making sure they are who they say they are); credit scoring systems which rate borrower risk; and, the automated clearing house (ACH) system to move the funds between both parties. In addition, we provide our LendingMatch™ system to minimize risk and allow community based lending.

 

CB Insights

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CB Insights

CB Insights is a private company database that provides real-time information on the world's most promising companies, their investors, their acquirers and the industries they compete in to help you invest smarter.

Since launching in 2010, CB Insights has become the most trusted and loved source for private company information. Hundreds of clients (including New Enterprise Associates, Cisco, Salesforce, Castrol and Comcast) rely on CB Insights to help them answer the tough questions.

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OnDeck Capital

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We’re 100% focused on small business.

We launched OnDeck in 2007 to solve a major issue facing small businesses: financing. We combined our passion for Main Street with cutting-edge technology to evaluate businesses based on their actual performance, not personal credit.

That’s enabled us to say “yes” more often and faster than traditional lenders. And that lets owners spend their time where it should be—on growing their business, not seeking financing.