Get In Before The IPO

By Wayne Mulligan, on Thursday, February 19, 2015

Did you get in on the biggest U.S. IPO of 2014?

That prize goes to Lending Club (NYSE: LC), the pioneer of alternative lending. Lending Club’s IPO lifted off like rocket, and the company currently commands an $8 billion market cap.

Early investors made a killing: venture firm Canaan Partners, for example, made an estimated 56.3 times their money.Other alternative lenders, taking their cue from Lending Club, soon followed suit:

On Deck Capital (NYSE: ONDC) went public a few weeks after Lending Club, and now a company called Prosper.com is preparing for an IPO.

But we’ve got our eye on another alternative lender.

It’s earlier in its life cycle than Prosper, but it might have IPO plans, too.

And if and when it does IPO, a few lucky Crowdability readers could make a fortune.

Are you one of them?

Next Generation Lender

The company I’m referring to is called Borro.

Like Lending Club, Borro is an “alternative lender” – in other words, it’s in business to lend money, but it operates differently than a traditional lender like a bank.

Simply put, Borro makes loans to consumers like you.

What makes it special – the reason it’s attracted so much attention – is the way it calculates how much money to lend.

Traditional lenders use “credit-based lending” – in other words, they loan money based on your credit score: the higher your score, the more you can borrow.

Borro, on the other hand, uses “asset-backed lending.”

Let me explain what that means...

From An Antique Porsche to a Picasso

Let’s say you need $50,000 to pay some property taxes.

You could sell some stocks to pay the bill, but you’d rather not.

So you ask Borro for a loan.

As collateral for the loan, you give Borro access to your antique Porsche, or to a small drawing by Picasso.

In general, the collateral needs to be worth about twice as much as the loan.

That way, even if you default on the loan, Borro can sell the collateral at a profit.

In many ways, Borro is an upscale, modernized version of a “pawn shop” –

And their typical customer is pretty upscale, too:

In fact, most customers are wealthy in terms of assets – it’s just that they occasionally have a short-term need for cash.

Progress To Date

Founded in 2008, Borro has lent a total of nearly $200 million.

It’s currently lending out an estimated $9 million to $10 million per month, with loan volume on pace to double each year.

That’s impressive growth.

To try and profit from that growth, investors have been lining up.

One such investor is Canaan Partners – that’s the same venture firm that was an early investor in Lending Club.

Since they know this sector well, that’s a big vote of confidence.

Did You Get In Early?

But Borro’s most recent funding was led by OurCrowd.com, one of the funding portals we feature on Crowdability.

Borro raised a total of $19 million – with $7 million of it coming from investors like you on OurCrowd, and the rest from professional investors like Canaan.

That makes it the largest equity crowdfunding completed to date.

And the best part is, there might be some Crowdability readers who got in on the deal.

We featured Borro in the December 22nd, 2014 issue of the Crowdability newsletter.

If you read that issue and invested in Borro, congratulations might be in order:

Even if the company performs only half as well as Lending Club, you might be in for some serious profits.

Time For a Little Treat

If you didn’t invest in Borro, not to worry:

You’ll have plenty of other early-stage investment opportunities in the future.

But to see returns like 56.3 times your money (like Canaan did with Lending Club), it’s helpful to do two things:

  1. Get in early, and
  2. Put your money next to smart money

And now it’s time for a little treat:We recently did an exclusive interview with Borro’s founder and CEO, Paul Aitken.

You can listen to the interview here:

Best Regards,
Wayne Mulligan

Founder
Crowdability.com

Comments

If you enjoyed this article, subscribe to updates:

Sign-up today and you'll receive our daily insights on early-stage investing, as well as our FREE "Equity Crowdfunding Action Kit" – where you'll learn:

  • The Ins & Outs of Equity Crowdfunding
  • A step-by-step path to get started
  • Tips from dozens of Venture Capitalists
subscribe to updates

Thank you for subscribing!

Tags: Equity Crowdfunding Ourcrowd Lending Club Alternative Lending

Share This:
comments powered by Disqus