[qi:021] It may turn out to be a new way of proving your model: Launch an application on the Facebook Platform, see if it works, and if it does, take your hard data to a group of VCs and raise capital to grow your business.
At least that’s the way it worked for Lending Club, a Sunnyvale, Calif.-based startup that is going to announce $10.26 million in Series A funding from Canaan Partners and Norwest Venture Partners tomorrow.
The company offers personal loans ranging from $500 to $25,000 to people with credit scores at or above 640. All of the loans are funded by individual lenders; to date, lenders have funded 80 percent of all loan requests. The startup, headed up by founder Renaud Laplanche, soft-launched its offering on Facebook in May 2007, yet it currently has 13,000 users and has given out — so far — $750,000 in loans.
The peer-to-peer lending is an interesting (and growing) business, as indicated by the early success of startups such as Prosper, which has been funded by Accel Partners, Benchmark Capital, Fidelity Ventures and Omidyar Network. Other players in this market include Loanio, Zopa and CircleLending. (see a related story from the WSJ: Options Grow For Investors to Lend Online)
But back to Facebook as a pre-funding lab: Think about it, and tell me if that can actually work.