This isn’t the first time that we have talked about third party tools for automated investing on Peer & Social Lending. Today marks the first of a series of posts we plan to do on all of the popular third party tools that exist for Lending Club and Prosper. We are starting off this series with a Q & A of LendingRobot created by Gilad Golan and Emmanuel Marot. As you read through this post be thinking of other questions you may have as Emmanuel has agreed to field any additional questions in the comments section.
Q: Can you tell us a little bit about how and when you got started in LendingClub?
A: My partner Gilad started investing on LendingClub approximately 18 months ago. He told me about it around 1 year ago, and I started investing on LendingClub right away.
Q: When did LendingRobot come to be?
A: About 9 months ago, we began to investigate how to automate our LendingClub investment. Gilad was spending too much time, and as for me, I had too much cash left idle. Since I used before a ‘sniping’ tool on eBay, we thought we could do something similar on LendingClub. Then we began to monitor how fast the loans were snatched up, and were shocked. As manual investors, we never realized so many loans were gone in seconds. Our ‘robot’ started investing for us this summer. We offered a private beta to a handful of users in September, and they loved it. We Therefore decided to make it a real product. We spent an entire month optimizing our investment engine, so placing orders scale very well.
Q: What are your subscribers allowed to use for filtering? Is it solely LC filters?
A: The LendingClub Filters available now on LendingRobot are: Credit Lines, Credit Score, Max. delinquencies, Home Ownership, Inquiries, Loan Amount, Max. Debt / Income, Public Records, Loan Purpose, State and Term. LendingRobot also offers some unique filters, not available on LC: Loan Popularity, Loan Payment to Income Ratio, and sub-grade.
Q: Can you explain how the ‘popular notes’ work?
A: When we started LendingRobot, we thought some users may not want to conduct their own research and devise their investment strategy. At the same time, we saw a lot of hedge funds snatching up some loans very fast. So we reasoned ‘if those guys spend so much effort in getting loans that fast, they probably don’t pick them at random. They did their homework, let’s just follow them!’. So what LendingRobot does is take a snapshot when new loans are put on the market, wait a couple seconds, then take another snapshot. Then it ranks the loans by how much money has been put in them already. If within 5 seconds a loan gets $15,000 of funding, it’s more popular than a loan that gets only $4,500.
(Note: you can view the popular notes here: https://lendingrobot.com/#/popular)
Q: Are any past returns used to determine investments?
A: Right now, we are not an investment advisor, and therefore are not here to tell people what they should do. But we want to help them decide. This is why we created a tool, we called the ‘LendingClub Explorer’, that lets investors (whether they are LendingRobot customers or not) to do some sophisticated analysis of past returns, but in a very graphical way. It’s also possible to share results, if people want. For instance, did you know it’s better to lend money for wedding
(https://lendingrobot.com/lc_explorer/#pur_sel_Vacation%2CWedding) than education or business (https://lendingrobot.com/lc_explorer/#pur_sel_Educational%2CSmall%20business)?
Depressing, isn’t it?
Q: Do you use any external sources to determine top picks?
A: Not at the moment.
Q: Can subscribers expect that they always remain fully invested even with larger accounts?
A: It really depends how many rules they define, and how restrictive they are. But with enough rules, yes.
Q: Can you explain a little bit about your pricing structure? (.49% of submitted notes which means that the cost would actually be higher due to notes not being funded)
A: That was kind of confusing, and based on user’s feedback we changed that this week. Now it’s .69% of money invested. We verify the loans were issued before charging.
Q: Can you explain how you verify what loans were actually invested as far as charging? Are you able to do this with the Lending Club API and connecting to customers accounts?
A: Since we keep track of orders we successfully submitted for each user, we don’t have to monitor each individual account; we monitor loans status: if loans are expired we discard the order, and if it is issued we charge users that ordered that loan.
Q: Can you provide any information on LendingRobots results? (if notes are seasoned)
A: We’re kind of cautious, so It’s too soon to tell. That being said, as individuals, given the results we have on our personal LC accounts, there’s no way back for us 
Q: Can you explain about the security measures for your product?
A: My partner Gilad worked previously on a security startup he sold to Microsoft, so he takes that very seriously. We won’t disclose too much of it, but on a general basis, the server that handles the orders and maintains users’ credentials is physically and logically separated from the LendingRobot.com website. For instance, even if we want to display your LC credentials on LendingRobot.com (like in your account > settings) we couldn’t! Also, everything is stored encrypted.
Q: Any plans for support for Prosper?
A: Absolutely! And more…
Q: How do you compare with prime?
A: PRIME is very good for people who want to save time, and are content with OK returns. LendingRobot can be much more aggressive, because we’re not the market-maker. There’s further explanation on our blog:
http://blog.lendingrobot.com
Q: When can potential customers expect to hear back if they provide their email in the ‘sign up’ section of your site?
A: Right now the wait time is around a few days, but of course it tends to grow when there’s a post talking about LendingRobot somewhere.
Closing:
I just want to thank the folks at LendingRobot for giving us some additional insight into their tool. If you would like to see a tool featured on this series or have a third party automation tool yourself, please Contact Us! Like I mentioned earlier, if you have any additional questions regarding LendingRobot, feel free to ask in the comments section below and Emmanuel or Gilad will respond as soon as they can. You can learn more about LendingRobot here or signup for the service here.
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Peter Renton (@LendAcademy) says
I am curious as to whether the owners of Lending Robot have sought legal advice on their business model. I am concerned that not being a Registered Investment Advisor, they are in a legal gray area charging for a service like this. Be interested to hear them elaborate on this.
Emmanuel says
Until we’re registered as Investment Advisor, we’ll stay away from personalized recommandations in order to stay on the right side (following Section 202(a)(11)(A)-(E) of the Advisers Act). That means LendingRobot users have to decide by themselves the strategy they’ll follow.