By Guglielmo de Stefano on 30th March 2016
Ranger AM, Liberum and Velocity Venture Group launch LendTech Capital Partners, a new investment advisor focused on the marketplace lending space.
The three businesses have come together to launch LendTech Capital Partners, a venture capital partnership that will raise and invest funds dedicated to venture capital stage investments in marketplace lending platforms and related businesses. LendTech's private equity strategy specifically looks to make Seed, Series A, and follow on investments within the AltFi spectrum. The company will not only focus on investments in marketplace lending platforms, but also on complimentary businesses, including technology, media and marketing firms across North America, Europe, and other emerging markets.
Founded in 2007, Liberum is an investment-banking group with offices in London and New York. Focused on raising capital for UK and international businesses (over $20bn to date), the company has also a dedicated Alternative Finance team that leverages its relationships with emerging online lending platforms to provide investors with investment opportunities. Liberum conceived Europe's first institutional investor in marketplace loans in 2013 and has raised over $1.9B for marketplace lending funds and platforms.
According to Simon Atkinson – Head of the Alternative Finance division at Liberum – investment opportunities continue to arise in the Alternative Finance space, especially as the sector becomes more established by moving into spaces that are the preserve of banks. Atkinson cited LendingWell – Liberum’s newest investment – as an example of how the sector is maturing fast. LendingWell aims to provide a simple way for financial advisers to access peer-to-peer loan products via just one account.
“For Liberum, the establishment of LendTech Capital Partners expands on the early stage investing in the Alternative Finance space its been undertaking since early 2013. The first of those investments, which was successfully realised, was the venture that became Eaglewood Europe, the investment manager of the £870m P2P Global Investments fund.”
Cormac Leech, a director at Liberum Alternative Finance, weighed in:
"We strongly believe in the advantages that Marketplace Lending offers over traditional bank lending. With their cost effective models, more friendly borrower experience and their ability to pull large amounts of borrower data quickly, Marketplace Lenders are the future of the financial industry."
Ranger Alternative Management is an affiliate of Ranger Capital Group a holding company that controls a variety of registered investment advisers offering traditional and alternative investment opportunities to institutional and high net worth individual individuals. Ranger Alternatives manages two leading direct lending funds, “The Ranger Specialty Income Fund” and “The Ranger Direct Lending Fund”.
Bill Kassul, a principal in Ranger Alternatives Management, commented:
"Because we have a deep understanding of the industry and how marketplace lending platform valuations are tied closely to their originations, it gives us a competitive advantage. In the past year, all three of LendTech's affiliate partners have been approached by private equity investors who wanted to leverage our exclusive insight into deal flow. This new fund will allow them to do this".
Located in Dallas, Velocity Venture Group is a FinTech advisory firm that partners with selected businesses to manage comprehensive capitalization and growth strategies. Since inception, Velocity members have led over $3 billion in strategic investments, acquisitions, and recapitalizations in the payments, transaction services, and banking industries.
Andrew Rueff, a partner at Velocity Venture Group, said:
"The partners behind LendTech provide a tremendous advantage by enabling us to leverage well timed investments in businesses poised for rapid growth. We are focusing investments on strategic companies that have clearly defined competitive advantages coupled with strong management teams."
This new partnership on first inspection looks an ambitious venture. All three firms know the space well and have deep contacts. The challenge will be to find new niches and opportunities in a space that has received a huge amount of VC interest. Then again the stated declaration to look beyond just marketplace lending platforms could be an indicator of future intent – maybe the tech and media enablers of the AltFi revolution will be the major target?
Another question will be just how early stage the investments will be. Will LendTech back more mature businesses that might appeal to private equity houses or focus instead on much younger businesses and start-ups, which are much riskier and take longer to turn a profit?