The new service will use Amazon Web Services’ machine learning and compute servers, thus eliminating human intervention. With no need for human advisors, the startup will be able to reduce costs and expand revenues. By using the blockchain technology, the fund will provide an increased transparency of asset transactions.
The startup serves 6,500 customers, who are looking for investment opportunities across multiple P2P lending systems. The fund will invest in loans on such platforms as Prosper Marketplace, Funding Circle, and LendingClub Corp., allowing its clients to diversify their investment portfolio.
“Alternative lending proved to return excellent performance and with new origination platforms growing quickly comes the opportunity to diversify further,” said Emmanuel Marot, CEO of LendingRobot. “But fragmentation makes investing even more complex for individual investors.”
Due to the use of the technology, LendingRobot Series will charge lower fees if compared to traditional hedge funds. It charges only 1.00% of assets under management and caps fund expenses at 0.59%. Typically, hedge funds charge management fees of 2% and 20% of investment gains.
“Turmoil within the past twelve months among some of the largest origination platforms showed that ‘platform risk’ is real, and left many clients increasingly worried about investing only in unsecured consumer loans despite the fact that the returns have remained steady,” Marot continued.
Every week, the fund will publish a detailed ledger of its holdings, which will get a hash code signature and will be notarized in Ethereum blockchain to ensure the data is tamper-proof.
Managing investments and collecting interest across multiple platforms can become quite complex, so LendingRobot decided to develop software that will automate these processes.
“All investors would be well served by diversifying into multiple marketplaces, but that process is tedious, complicated, and requires a high degree of domain expertise to accomplish correctly,” Marot said.
“That’s why we’ve created LendingRobot Series, to provide investors that understand the value of investing in alternative lending with the confidence that comes from intelligent automation, easy liquidity, and complete transparency.”
LendingRobot was established in 2012 by Marot and Gilad Golan, who left the startup in October to join Google as an engineering director. The company, which includes seven employees and owns more than $120 million in assets, has raised about $3.7 million in venture funding to date.