Renaud Laplanche, who abruptly stepped down as CEO of LendingClub Corp in May, has launched a new online lender called Upgrade, the company said on Thursday.
San Francisco-based Upgrade has raised $60 million in equity and convertible notes from a large group of U.S. Investors including Union Square Ventures, Ribbit Capital, Vy Capital and Silicon Valley Bank, the startup said.
It said investors also included large Chinese lender CreditEase and Noah Holdings, an investment management firm.
Laplanche, who founded and took LendingClub public, sent shockwaves through the emerging online lending industry with his resignation last year, after the company acknowledged a series of loan malpractices.
LendingClub, which runs a website where consumers can apply for loans funded by individual or institutional investors, said it had altered documentation when selling $22 million in loans to Jefferies Group. The loans were later repurchased by the online lender.
An internal probe also revealed that Laplanche and his family had taken out 32 loans on the platform in December 2009 to boost the company’s volumes just four months prior to closing a round of venture capital funding.
Laplanche is now making his comeback with the support of LendingClub’s venture capital backer Union Square Ventures.
“We are thrilled to be backing Renaud again, after having worked alongside him at Lending Club for many years,” said Fred Wilson, managing partner at Union Square Ventures in a statement.
By automating much of the lending process companies like LendingClub, OnDeck Capital Inc and Prosper are able to service borrowers that have become too risky or expensive for banks to lend to from their more constrained balance sheets.
While the sector has continued to expand, growth has softened, in part because of investor concerns regarding the quality of the loans.
Unlike LendingClub, loans originated on Upgrade will only be bought by large asset managers, and not by individual investors.
The loans will be issued by bank Utah-based WebBank and later purchased by Upgrade. The startup will retain a portion of those loans on its balance sheet.
It will also provide borrowers with a series of tools to help them monitor their credit.
Upgrade is being advised on its capital market strategy by Jefferies, which is also expected to participate in loan purchases and help kick off the company’s securitization program.
Co-founded in August with Soul Htite, the CEO of Chinese online lender Dianrong, the startup is also backed by Apoletto, FirstMark Capital and Uprising.
