Over the past two weeks, the Twitter-scape has seen a minor flurry of speculation regarding Pertuity Direct, a more recent entrant to the social lending space. As a PD lender, I was mildly worried about the status of my deposits and confused by the lack of formal notice on the platform's website. This past week, I had my full deposit (plus ~2% interest) returned unceremoniously to my bank account, confirming my suspicions that the site is closing its doors.
This is an unfortunate development for the social lending industry. I interviewed the PD CEO back in April and was impressed with the caliber of the team and also the different approach that the company was taking, as they sought to make social lending a more mainstream concept. Unlike the major players at the time, Prosper and Lending Club, PD eschewed the typical borrower profile pages, instead embracing the concept of a pool of anonymous super-prime borrower loans. This approach earned them some flak at the time for being more of a bank than a p2p lending destination, but I always appreciated the approach of targeting a more mainstream segment of the population with more traditional banking and investment products that were nonetheless informed by some of the goals of the social lending movement. This seemed like an important complement to the other players that were more community-based, holding interest auctions or creating borrower profiles.
At the time of their arrival on the scene, I thought that this model might have ended up being the more long-lasting, but it appears that is not the case. PD has offered no explanation as to the reason for their disappearance, but I would speculate that the hybrid approach just didn't catch on. Like Lending Club, PD is SEC-registered, so legal woes were probably not their challenge (as in the case of Prosper), but there was still something non-traditional in their tactics that lacked the appeal of direct borrower-lender connection that many entrants expected from the space.
Yet, while Pertuity Direct closes, the broader social lending space is still going strong. Lending Club is thriving, fast approaching their 25,000th investor. They, too, are seeking to take the p2p lending concept mainstream, offering a great alternative investment product for lenders and loan conditions for borrowers, and currently offer the best hope for the nascent industry in the US.