Ever since LendingClub announced they were shutting down their retail investment platform, we’ve seen an increased interest from their former investors here at PeerStreet. That makes sense because PeerStreet offers a similar product and experience to LendingClub, but with what we believe is a more interesting asset class.
Instead of consumer debt, PeerStreet’s investments are backed by real estate debt. The primary difference between the two is that unlike consumer debt, where there is little hope for recourse and repayment if a borrower stops paying, PeerStreet’s investments are backed by actual real property that we can foreclose on if a borrower stops paying. While not completely removing the risk of principal loss, the underlying security and the ability to easily diversify across multiple investments helps limit investor portfolios’ exposure to individual non-performing loans. Our recently published loan performance report speaks to that.
We were saddened to see LendingClub shut down their retail platform because they and Prosper were pioneers in allowing individuals to invest fractionally in loans. This allowed people to access debt as a fixed income asset class more easily, transparently and directly than ever before. In many ways, these pioneering platforms were inspirations to PeerStreet. Unlike those platforms, however, we chose to focus specifically on real estate debt because we felt it was a better and untapped market for investors. The reason is twofold.
First, we believe that debt collateralized by real estate has a better risk-return profile for investors than consumer debt. Second, we feel that connecting investors more easily and directly to real estate debt has the potential to create much more value for society in a way that doesn’t exist with other asset classes - when investors buy loans through PeerStreet, their capital supports small business lenders and real estate entrepreneurs, creating opportunity for them to grow their businesses and invest in their communities.
With these factors in mind, we created an investment platform that made it easy for individuals, family offices, RIAs and institutions to invest in real estate debt across nearly all 50 states. Over the past several years, close to $4 Billion has been invested through our marketplace, earning investors hundreds of millions of dollars of interest income and powering thousands of real estate entrepreneurs, who in turn invested that capital into thousands of projects in communities throughout the country.
From the founding of PeerStreet, we have remained dedicated to leveling the playing field between Wall Street and Main Street. Our first investors transacted through our retail platform at PeerStreet.com, and while they were later joined by institutional investors, providing access to individual accredited investors remains at the heart of our philosophy. We were one of the very first companies in the real estate space to develop a platform for individuals to access real estate debt investments, and today, we’re one of the few left standing. Our commitment to individual investors has never been stronger and we remain focused on building more features to make investing even better, easier, and more transparent than ever before.
We continue to focus on providing retail investors with new ways to invest and tools and resources investors need to research, select, and invest to build their own real estate debt portfolios. In fact, we’ve recently launched the Credit Opportunity fund and added features to Automated Investing, both aimed at providing an easy and accessible experience to investors. At PeerStreet, we remain dedicated to our fractional investment platform and remain committed as ever to providing investors with the opportunity to access real estate debt.
To previous Lending Club investors and new investors visiting PeerStreet for the first time - we welcome you and look forward to helping you better understand and use our platform.