Lending Club founder Renaud Laplanche opens up on his ‘frustrating’ exit and new startup Upgrade
- Renaud Laplanche resigned as CEO of Lending Club last year amid loan selling scandal.
- Back with new startup Upgrade, an online lending platform with credit scoring features.
- Upgrade wants to launch one new product a year, with plans for mortgages, auto loans, and more.
LONDON — Renaud Laplanche tries to "keep a positive attitude rather than focus on my frustration" when it comes to Lending Club.
"It’s hard — I have good days and bad days," the Frenchman told Business Insider at the LendIt Europe conference in London this week.
Laplanche cofounded US marketplace lender Lending Club in 2006 and led the business to a $5.4 billion (£4.1 billion) float in 2014. But in May last year, he resigned amid during amid scandal. Loans sold to investors were found to violate the terms investors had agreed to buy them on.
"There was a fairly significant compliance issue, I took responsibility for it," Laplanche told BI.
"It was very, very frustrating. I’m not commenting on the story, but the best way to actually understand what really happened is to read the filings. I think the press made it sound a lot worse, a lot more sensational, than it really was."
REUTERS/Brendan McDermidEarly press reports focused on Laplanche’s investment in Cirrix Capital, an external fund that bought Lending Club loans. It was initially claimed that the Lending Club board were unaware of his investment, but later filings made it clear that at least some board members knew.
Now he is focused on "what can I learn from it, what can I do better. Upgrade has been part of that."
San Francisco-based Upgrade is Laplanche’s new online lending startup, launched in April of this year. Soul Htite, who set up Lending Club with Laplanche, is also a cofounder of the business.
The motivation came from a desire to "build a platform that incorporates all of these learnings [from Lending Club] and turn the entire thing in a force for good," Laplanche said.
"We had a long list of things where we said, if we had to do it all over again, we would do it differently. All the learnings over the last 10 years, all the feedback we got from the investors, borrowers, partners. There was enough there that we thought, yeah, it’s worth building a new platform from scratch."
Upgrade writes personal loans for people looking to consolidate credit card debt. The online platform also features tools that help people learn how to manage their credit score, including a feature that simulates the effect of various actions on their score.
"Let’s say you get a $1,000 bonus," Laplanche said. "If you decide to pay down your mortgage or pay off your credit card, it’s going to have a very different impact on your credit score and cost of credit."
Upgrade raised $60 million (£45.7 million) in April, the biggest ever Series A funding round for a US fintech startup. Many of Lending Club’s original investors have backed the business and Jefferies, an investment bank burned by Lending Club’s loan term scandal, has signed up to buy loans from Upgrade — a vindication for Laplanche.
Upgrade spent until late July testing the platform but began ramping up lending in August. Laplanche won’t disclose lending to date or growth figures.
He said he hopes to launch a new product each year, with plans to branch into mortgages, auto loans, credit cards, home equity, and lines of credit.
"At Lending Club it took me a very long time to start working on new products," he said. "At Upgrade, I designed the platform from scratch as a multi-product platform, using infrastructure that makes it easy to launch new products. The vision is to address all the credit needs of our customers."
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