investiledysfunction

I’m a big fan of P2P lending as my prior post on the topic will demonstrate and so I keep abreast of developments in this arena especially as I believe that this business has some very disruptive possibilities.  The last couple of weeks have seen some interesting developments, notably:

1. The entry of newcomer, Loanio, to the space.  Their pitch doesn’t all that different than Prosper, but I haven’t done much diligence on them so may be I’ll get around to that.  Their website is clean, but browsing a couple of posts, they seem to have a handful of loan requests but not a ton of bidders to this point willing to fund those initiatives.
2. The bigger news of the week is the departure of Zopa from the US market to focus on the UK, Japan and Italy.  While my first instinct was that they chose to avoid the crazy credit markets of the US, it seems they ran into regulatory roadblocks that prevented them from ever getting started.  This is surprising given they seem to have a much more seasoned team and more money than Prosper and Loanio, but I guess stuff happens.

If regulatory reasons were the impediment to them getting started in the USA, it is a shame.  With credit markets tighter now, there may have been an interesting opportunity for players like Prosper, Loanio, Zopa and LendingClub to step up and fill a void as many consumers and small businesses may be finding it difficult to get credit given tightening conditions.

If Zopa is leaving because they couldn’t take the heat in the US “credit kitchen” as some have suggested, this indicates the company has little faith in its risk modeling capabilities.  If you’re only willing to play in a market when you perceive times to be good, that is not much of a business.

Let’s hope it was just regulatory issues.  I hope the rest of the guys will make some inroads during this time and begin to put P2P lending on the map.