DST, Iconiq join Series A round for Hong Kong P2P lender WeLab

Last June the company announced that it had received $14 million in first round funding from Sequoia Capital and TOM Group, which is controlled by Hong Kong-based billionaire Li Ka-Shing.

WeLab was founded in 2013 by CEO Simon Loong, who previously held senior positions at Citibank and Standard Chartered. Supported by a team of professionals from other financial institutions and technology companies, he wanted to disrupt the traditional credit services space by creating a seamless online and mobile lending solution for the Asian market.

Online peer-to-peer (P2P) platform WeLend - which is regulated by the Hong Kong authorities - launched the same year. It now has more than 14,000 members and has processed over HK$1 billion ($129 million) in loan applications. This service was followed by Wolaidai, a China-based mobile P2P platform specializing in small loans for young people, particularly college students.

WeLab will use the Series A funding to develop its internet finance businesses in mainland China, including a product that uses big data for credit risk modeling. It has already established strategic partnerships with a variety of mobile, e-commerce, and financial companies.

P2P lending services have exploded in China, with over 1,200 platforms in operation as of June 2014, up from 600 at the end of 2013, 240 in 2012 and 20 in 2011. Transaction volume reached RMB10 billion in the first half of 2014 - close to the full-year total for 2013 - according to the Internet Society of China.

Venture capitalists see it as an enormous investment opportunity, partly because the likes of Baidu, Alibaba and Tencent Holdings have yet to build a dominant presence in the space. A Trustbridge Partners-led $130 million round for Renrendai last year inevitably drew attention, but capital has also gone to the likes of PPDai, Dianrong, Yooli and CreditEase, which started offline and then moved online.

The P2P premise is simple: People lend their money to strangers and in turn enjoy interest rates exceeding 15%, far more than the 3% offered by banks. More importantly, the online platform serves as a bridge between lenders and small-scale start-ups, many of which are unable to get bank funding.

However, concerns remain about regulation and reliability. Business model differ considerably and it remains to be seen how the China Banking Regulatory Commission responds to the danger of individual lenders will falling victim to illegal fundraising and poor credit management by platforms.

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• Topics
• Venture
• Greater China
• Financials
• Technology
• Early-stage
• Hong Kong (China)
• China
• Financial Services
• TMT
• Venture
• DST Advisors
• Sequoia Capital