Renaud Laplanche: the sailor who revolutionised banking

Renaud Laplanche dreamed of being a yachtsman. He became a fintech pioneer instead – but he’s been forced to navigate some choppy waters in his chosen industry. Jane Lewis reports.

Growing up in the south of France, Renaud Laplanche dreamed of competing for France as a prize-winning yachtsman. His parents persuaded him to take a law degree first, and the would-be ocean adventurer ended up on a completely different tack – launching the trailblazing peer-to-peer platform Lending Club in 2006, taking it public in 2014, and pioneering much of the revolution in new financial technology.

Running aground

“Soft spoken and unfailingly polite”, as Forbes noted in 2015, Laplanche claimed, with some justification, to
be “transforming” the banking industry – bypassing banks to link would-be borrowers with lenders online. He swiftly established his outfit as the market leader, originating some $20bn in loans and winning copious “disruptive innovator” awards. Then came the shipwreck.

Barely a year after Forbes’s profile, Laplanche was “pulled into a meeting” and told “to resign within 24 hours or he would be fired”, says The Wall Street Journal. An internal review had uncovered “defective controls”, “doctored paperwork”, evidence of loan mis-selling, and a big conflict of interest. Laplanche, it seemed, had taken a stake in a customer fund called Cirrix Capital and, at his urging, the firm had invested, too. Not all board members were aware he was a limited partner in the fund.

Laplanche’s exit “rattled” investors: Lending Club’s shares tanked, and the entire sector was shaken amid fears of a wider unravelling: if the market leader was vulnerable, what might be lurking elsewhere? But it didn’t last long, says the Financial Times. The firm remains the sector leader by volume, originating about $2.4bn of loans a quarter since then.

The relaunch

After taking time off to go hiking with his family in the Alps, Laplanche “resurfaced” last year with a new company, Upgrade. Supporters claim it beats the original Lending Club in tech sophistication and has a better model – selling loans only to institutions, rather than retail investors.

Laplanche, 48, has had plenty of thrills and spills during his meteoric ascent, says Forbes. His first job was in the Paris office of US law firm Cleary Gottlieb Steen & Hamilton. In the late 1990s he was sent to New York, with the dotcom boom in full swing. He left to found TripleHop Technologies, which featured an early version of an enterprise search engine. It was bought by Oracle for $10m in 2005. Laplanche moved his family to the west coast and launched Lending Club – inspired by the gap between the low rates banks offered savers and the “exorbitant” rates he had to pay on his credit card to cover TripleHop’s early outgoings.

It had seemed a golden career – Laplanche even took up yacht-racing again in a boat “built for serious speed” – though the fallout from the scandal clearly shook him, says BusinessInsider. “I have good days and bad days,” he remarked in October.

He is now focused on “what can I learn from it, what can I do better. Upgrade has been part of that.” Last year, Upgrade raised $60m – “the biggest ever series A funding round for a US fintech start-up”, backed by “many of Lending Club’s original investors”. The market is now more crowded than ever, notes the Lending Times, and “margins have shrunk”. Still, many reckon that if anyone can steer a clear course it’s “the guy credited with creating the industry in the first place”.

disfi.com