Orchard Platform, a New York investment and analytics startup, raised $12 million in Series A funding today, bringing its total investment to $14.7 million. Investors include many former banking and investment CEOs, along with well-known venture firm Spark Capital, which is based in Boston.
Founded in 2013, Orchard Platform connects institutional investors to peer-to-peer platforms in what’s been dubbed “online direct lending.” Online direct lending, or marketplace lending, allows borrowers to apply for loans online. These loans are funded by multiple investors, so that loans have a broader source of capital. Investors then earn profits from principal and interest payments.
Investors in the new funding round include Max Levchin (co-founder and former CTO of PayPal), Hans Morris (former president of Visa), Nigel Morris (co-founder of Capital One Financial Services), Vikram Pandit (former CEO of Citigroup) and John Mack (former CEO of Morgan Stanley). Along with Spark, which has previously backed companies including Twitter and Wayfair, Canaan Partners also took part in the round for Orchard Platform.
In a news release, Spark Capital general partner Santo Politi said that “when we first looked at Orchard, the overall direct lending market was primarily a consumer phenomenon.”
“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,” Politi said.
Marketplace lending started out as peer-to-peer lending, but is quickly being overtaken by large firms looking to profit. John Mack, chairman and CEO of Morgan Stanley, said in the news release that
For institutional investors, the direct lending market wasn’t even a blip 18 months ago. 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.
