There's a certain irony to the upcoming IPO of LendingClub, the nonbank lender that's used algorithms, software and a Web-based platform to take on the traditional banking system. The biggest winner in the deal is likely to be none other than Wells Fargo, the largest U.S. bank by stock market capitalization.
It's an indirect relationship. LendingClub, like most emerging tech companies, is backed by venture capitalists, with the four top firms owning more than half the company, according to its IPO prospectus filed on Wednesday. The investor with the biggest stake is Norwest Venture Partners, based in Palo Alto, California. Norwest is unusual in that all the capital for its funds comes from a single investor—Wells Fargo. Most firms bring in money from an array of endowments, foundations and universities as well as big financial institutions.
Norwest and venture firm Canaan Partners first backed LendingClub in 2007, in a $10.3 million financing round. At the time, LendingClub was using Facebook to find potential borrowers and had yet to issue $1 million in loans. Seven years later, LendingClub is way off Facebook and has originated more than $5 billion in loans, with about 20 percent coming in the most recent quarter. Norwest's Jeff Crowe joined the board in 2007 and remains a director.
Katie Belding, a spokeswoman for Norwest, said Crowe was unavailable for an interview because of the pre-IPO quiet period.