Thursday, August 27, 2009

Another One Bites The Dust. Loanio Has Sold Code for Cash.

American peer-to-peer lending platform Loanio appears to be vanishing as well.

The company, which originally launched in October 2008 has only issued seven loans, one if which is now thirty days past due.

The latest amendment to their S-1 filing (August 14) discloses that they’ve permanently licensed their source code to an unnamed corporation. The code was sold for $375,000, of which $100,000 was the down payment, and the remainder will be paid over 18 months. The blog notes that the Loanio engineering team has shrunk from five full time engineers to three part timers since their last filing with the SEC.
Jessica Ward is a freelance writer and blogger from Seattle. She blogs on family and frugality at The Pennywise Family and DebtKid.


P2P Lending News said...

The fact that Loanio licensed their code to another company isn't a sign of surrender... just a way to make money while the site is not offering loans.

That Loanio filed an amendment to their S-1 at all is a pretty strong indicator that Loanio is NOT biting the dust. If they were actually closing down, they wouldn't have bothered filing.

JessicaW said...

P2P Lending News--thanks for your comment. I hadn't considered that perspective. How would Loanio go back to offering loans once their code has been sold? I presume it would be proprietary to the "NEW" owner? I'd love some more thoughts/ideas on how this transaction could work. Naturally, I want to see these companies succeed, so I'd love to know more about ways they can make it.


Jared said...

Jessica, my thought is that since they "licensed" the code as opposed to selling the company they are just allowing someone else to use what they have already created. The only reason I can see that they would pet someone else use their code is because they are really hard up for $.

Write about when we launch.

P2P Lending News said...

JessicaW - it's probably not an exclusive license where the buyer prevents Loanio from continuing to use the code moving forward. In fact, although it is a "perpetual license", it probably does not include any future upgrades, so whoever bought it will probably build upon and change the code parallel to Loanio, in such a way that the buyer's site will probably not look much like Loanio at all.

Code is just computer files. Loanio essentially burned a CD of all the files that make up their web site, and sold that CD to someone for $375k.

Whoever bought the code wants to build a P2P lending site, but doesn't want to spend however many months building the site themselves. Buying Loanio's code is like jump-starting the process.