LendingClub’s former CEO, Renaud Laplanche, who stepped down in May, sending shockwaves throughout the online lending industry, is gearing up to launch a new lender online called Upgrade.
According to a report in Fortune, Upgrade of San Francisco, Calif., raised $60 million in equity and convertible notes from a slew of investors in the U.S., including Union Square Ventures, Ribbit Capital, Vy Capital and Silicon Valley Bank. Upgrade said in the report that other investors include CreditEase, the Chinese lender, and Noah Holdings, an investment management company. Fortune noted that when Laplanche, who founded LendingClub and took it public, left abruptly, it created turmoil in the online lending market that has been suffering from slow loan growth. Laplanche acknowledged loan missteps at LendingClub when he left.
“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 statement in the report. The loans originated on Upgrade will be sold only to large asset managers, keeping individual investors out of the platform. The loans will be issued by WebBank out of Utah and later purchased by Upgrade. Upgrade will hold a portion of those loans on its balance sheet, according to the report. The startup will also provide borrowers with tools to help them monitor their credit.
In May Laplanche and other senior managers departed after an internal review found abuses tied to the sale of a loan and a failure to disclose a personal interest in an investment fund.
“A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees,” Hans Morris, the newly named executive chairman, said in a statement said at the time.
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