Northern Light Venture Capital, a China-focused VC firm, has invested “tens of millions of dollars” in Dianrong.com. Based in Shanghai, China, Dianrong is an online lending platform.
SHANGHAI, Jan. 7, 2014 /PRNewswire/ — Shanghai-based online financial services firm Dianrong.com recently announced that it has entered into an investment agreement with Northern Light Venture Capital (NLVC), under which the company has received tens of millions of dollars in investment from NLVC. Industry watchers and players have taken note as Lending Club co-founder and former Head of Technology Soul Htite has brought the advanced technology and the rigorous peer-to-peer (P2P) management experience of Lending Club, the world’s largest online lending platform, to China and founded Dianrong.com. The successful financing is proof positive that Soul Htite’s Chinese dream for Lending Club has gained market recognition in China.
Following its founding in 2012, Dianrong.com has become a fast-growing peer-to-peer (P2P) lending website since going live in March 2013. As of the end of November 2013, the firm had achieved an aggregate trade turnover of more than 100 million Yuan (approx US$16.5 million) and attracted more than 10,000 registered investors. Dianrong.com differentiates itself from other P2P organizations in China by making technology and risk control the foremost priority. Since its inception, Dianrong.com has been a technology leader thanks to its reliance on Lending Club’s well-established system and management experience. The firm aims to create a long-term competitive advantage based on its extensive experience in delivering efficiency through technologies.
Commenting on its decision to invest in a P2P lending platform, Northern Light Venture Capital managing director Yang Ruirong said, “We have been keeping a watch on the development of the internet finance industry. The rapid development and adoption of internet technology have made inclusive finance a possibility. As an important part of internet finance, P2P has to some degree filled the financial service gap and further improved the financial system. China’s P2P market, now estimated at 20 billion yuan (approx US$3.3 billion) to 40 billion yuan (approx US$6.6 billion), is far from huge. Meanwhile, we notice that the industry is growing at an annual rate of more than 300% and is on track to witness explosive growth during the next five to ten years.” Yang added, “We chose to invest in Dianrong.com because of its highly professional team as well as its consistent and compliant business model. Dianrong.com is a secure investment platform with stable returns and high liquidity. With the improvement of China’s ability to conduct standardized credit background checks, implementation of regulations and the industry itself, such a sophisticated and strong P2P platform will no doubt go further.”
Dianrong.com CEO and founder Soul Htite said, “China’s fast growing and rapidly changing economy represents the perfect environment for modern business models empowered by technology to be quickly adopted. For instance, China is home to 42 million SMBs representing 99% of the country’s enterprises. They contribute to 60% of the GDP and 50% of tax revenue and still only 10% of them will receive funding from banks.”
When asked about the key advantages of the business model, Soul Htite added, “Our ability to efficiently and rigorously underwrite creditworthy borrowers and let thousands of lenders invest in them directly has created an extremely positive experience. Our borrowers can now receive their funds in days compared to few weeks with banks, and our lenders can generate returns well over traditional investments that are usually complex and not predictable. Using our online technology with little to no training, our lenders create well-diversified portfolios by investing in hundreds of borrowers that are not correlated to each other. Our current platform average return is around 16%.”
This is the key reason why Soul chose to launch a new startup in China. As a new financial operation model in China, P2P appears to have a lower threshold. Nevertheless, one should not think that success comes easily in China. Only advanced technology, strong operational capabilities and a proper business model can drive a P2P company’s long-term development. This is a unique opportunity for Dianrong.com and represents a new beginning of integration between technology and experience imported from the United States and China’s business model. Fortunately, Dianrong.com has put in place a high-quality management team with extensive experience in China and, at the same time, meets international standards. The investment by Northern Light Venture Capital will be used to support Dianrong.com’s daily operations and to provide low-risk, high-return financial planning products for general investors.”
Dianrong.com is an online lending platform based in Shanghai, China where members can borrow and lend money among themselves at better interest rates. Borrowers can get loans significantly below market rates, and lenders can earn returns well above those of bank deposits, wealth management products, trust products and other traditional fixed-income investments.
Named the “Lending Club of China,” Dianrong.com was founded in 2012 by the co-founder and former Head of Technology of Lending Club, Soul Htite, who joined efforts with Kevin Guo, a PE fund partner and lawyer from Shanghai. Dianrong.com ‘s proprietary and state of the art technology gives Dianrong.com a huge advantage over traditional banks by reducing the cost of customer acquisition, underwriting, fund managements, bad debt collections, regulatory compliance, and reporting. Better rates and better returns are now a reality in China.
Using the latest proven techniques in risk management and advanced technology similar to the one used by Lending Club (the world’s largest online lending platform), Dianrong.com has built a matching professional, transparent and easily operable online investment and financial platform, providing investors with an option to invest in individual consumers or small and medium-sized enterprises in need of money. Leveraging the internet platform, Dianrong.com has achieved lower auditing and operating costs than other financial institutions, benefiting both investors and borrowers.
In addition, Dianrong.com has an experienced team and strong risk control abilities. The company’s risk control model, which is based on seven years of experience in developing nearly one hundred risk models for commercial banks while taking full advantage of internet sources and several third-party sources, has a comprehensive process to detect and prevent fraud risk through more than 50 information detection rules coupled with a seasoned team of manual investigators, in order to reduce investment and financing risks.
Since public launch in March 2013, Dianrong.com platform has yield an overall portfolio return of 16.7% (after fees and NLPs). The company offers free portfolios tailored to each investor’s appetite for risk, with an optional investment lifecycle of 6, 12, 18 or 24 months. Investors in dire need of money can also assign their creditor’s rights for discounted cash from their investment, and they can top up and withdraw cash at any time, free of any handling charges.
About Northern Light Venture Capital
Northern Light Venture Capital (NLVC) is a leading China-focused venture capital firm targeting early and early growth stage opportunities. NLVC partner with select entrepreneurs with groundbreaking ideas and exceptional vision to build world-class companies. Each NLVC team member brings a strong investment track record and cross-border expertise in entrepreneurship, engineering and operations.
Founded in 2005, NLVC has emerged as a top venture capital firm along with the rapidly growing Chinese economy. To date, NLVC have backed more than 80 companies, and manage approximately US$ 1 billion in committed capital with 3 US$ funds and 3 RMB funds. The funds have attracted leading institutional investors from the United States, Europe and Asia, including sovereign funds, endowments and foundations.
NLVC, headquartered in Hong Kong, has offices in Beijing, Shanghai, Suzhou, Shenzhen and Menlo Park, CA.