Orchard Platform, an investment and analytics platform focused on the global marketplace lending market, today announced it has raised $12 million in Series A funding. This brings the total investment in Orchard to $14.7M. Spark Capital and Canaan Partners, which led the round, were joined by additional investors John Mack, former chairman and CEO of Morgan Stanley; Hans Morris, former president of Visa and managing partner at NYCA; Nigel Morris, managing partner at QED Investors and co-founder of Capital One Financial Services; Anthony Abenante, former CEO of Instinet and senior adviser at KCG Holdings; Max Levchin, founder & CEO of Affirm, and former co-founder and CTO of PayPal; and existing investors Tom Glocer, former CEO of Thomson Reuters; and Vikram Pandit, Former CEO of Citigroup. Orchard will use the funds to expand its team and accelerate the evolution of its technology platform.
Online direct lending, also known as marketplace lending, allows borrowers to apply online for loans that are funded by a diverse set of investors. This means that a broader source of capital is accessible to borrowers through these emerging marketplace lenders -- the products offered are unique and unmatched by anything currently available through more traditional channels. Institutional investors can choose to fund these loans and earn money on the principal and interest payments. The marketplace lending space has recently benefitted from the continued sophistication of investors and an expanded ecosystem of service providers. Traditional banks are also supporting the growth of loan originators by investing in their ability to effectively and efficiently fund and securitize loans. The space has also seen an increase in public awareness with major recent news events, including LendingClub's planned IPO.
'At Orchard, we are on the leading edge of this new frontier. We are in the early stages of a massive change to the credit markets, which we believe will transform lending,' said Orchard co-founder and CEO Matt Burton. 'Orchard's goal is to build the next generation of credit. Since founding the company one year ago, we have witnessed the emergence of a virtuous cycle that is driving benefits for all market participants.'
Here are what the investors have to say about Orchard:
'When we first looked at Orchard, the overall direct lending market was primarily a consumer phenomenon,' said Santo Politi at Spark Capital. 'Now, the lending opportunities are expanding -- small business loans, real estate, higher education. It's amazing to think how quickly the pieces of the marketplace lending ecosystem have fallen into place.'
'The growth in marketplace lending and the institutional investor interest in it has been nothing short of exponential,' said Dan Ciporin of Canaan Partners. 'The need for investors to be able to manage their assets across originators in this ecosystem has become acute. Orchard provides the perfect solution to this problem with a broad-based platform that enables any institutional investor to manage all their marketplace lending assets, wherever they may be located.'
'For institutional investors, the direct lending market wasn't even a blip 18 months ago,' said John Mack, former chairman and CEO of Morgan Stanley. 'Now we're seeing a situation where investor demand is outstripping supply. That isn't going to last as more and more lenders recognize the opportunity to scale and diversify their capital by embracing marketplace funding.'
'Changing the relationships between parties to a transaction is game changing,' said Nigel Morris of QED Investors. 'Orchard is making it possible for both online and offline origination platforms to efficiently gain access to capital by bringing together a diverse marketplace of institutional investors.'
'As it has in so many markets, the disruptive power of the Internet is leading to the reinvention of prevailing credit models,' said Max Levchin, founder & CEO of Affirm, and former co-founder and CTO of PayPal. 'I believe Orchard's technology will play an integral part in the process to the benefit of investors, lenders and borrowers alike.'
About Orchard
Orchard Platform is an investment and analytics platform that has quickly become the place where institutional investors and loan originators connect and transact. Founded in New York City in 2013, Orchard focuses on building the systems and infrastructure that will allow marketplace lending to grow into a major financial market. Orchard enables institutional investors to scale their investment in the space by providing investment strategy, real-time trading and reporting, premier analytics, and access to supply. Orchard connects originators to a variety of capital providers and enables them to focus on making loans. Orchard Platform Advisors, LLC is an SEC Registered Investment Adviser, and is also recognized as a clear thought leader in the space and publishes a blog on its website exploring analytical and technical topics related to lending, and runs the monthly Marketplace Lending Meetup.
About Spark Capital
Spark Capital is a venture capital firm that partners with exceptional entrepreneurs seeking to build disruptive, world-changing companies. Founded in 2005, Spark Capital manages approximately $1,825,000,000 across five funds. Founded in Boston, Spark has active offices in New York and San Francisco and invests across the globe. The firm focuses on the following key categories: advertising & monetization, commerce & services, content & media, hardware & infrastructure, mobile and social. Spark Capital has backed notable companies including Twitter, Tumblr, Foursquare, AdMeld, Adapt.tv, OMGPOP, Warby Parker and Wayfair. For more information, visit www.sparkcapital.com.
About Canaan Partners
For nearly 30 years, Canaan Partners has been investing in entrepreneurs with visionary ideas to improve the way we live our lives. With over $4.2 billion under management and more than 160 exits to date, Canaan has funded some of the world's most innovative companies in technology including Ebates, Kabam, Lending Club, and Skybox Imaging, as well as healthcare leaders such as Arvinas, Civitas Therapeutics, Durata Therapeutics, Labrys Biologics and Truveris. Headquartered in Menlo Park, California, Canaan also has offices in New York City, New York and Westport, Connecticut. For more information, visit us at www.canaan.com and follow us on Twitter @canaanpartners.