Landbay backer Michael Baptista has questioned the “shallow growth” of other marketplace lenders.
Baptista, founder of venture capital firm Assembly Capital Partners has queried the fast growth of other marketplace lenders focused on consumer debt, suggesting that these have since “hollowed out.”
He described an unnamed journalist in a LinkedIn post who had told him in 2017 that Landbay “always disappoints” adding that at the time there was a lot of focus on “glamorous, high-growth startups,” which made Landbay seem unambitious.
“The founders of some of these businesses even operated under the, apparently sincere, delusion that they would replace the banks,” Baptista, who invested in Landbay in 2018, said.
“Landbay chief executive John Goodall stuck to his original plan to originate in a specialist asset class and refused to chase easy but shallow growth.
“He also knew he had an important change to execute. The focus of Landbay’s funding efforts would move from retail to institutional.”
Baptista said it would have been easier to grow quickly in consumer debt.
“Origination volumes would have spiked and my journalist acquaintance would have been as impressed as he was by the other UK marketplace lenders,” he said.
“Today, those businesses look hollowed out. The long-term share price chart of Funding Circle tells the story.”
Landbay’s boss has said the buy-to-let lender’s previous advertising efforts to target retail investors were a “waste of money”.
Goodall also said in the post that it would have taken years for the platform to become profitable if it hadn’t shifted from retail to institutional lending in 2019.
He said there are still opportunities for alternative and specialist lending in the buy-to-let market and added that while it is focusing on sustainable growth, it still aims for an initial public offering one day.