Bitcoin crowd-lending platform BitLendingClub has just announced a €200,000 ($253,336) seed investment from European VC fund LAUNCHub.
The Bulgaria-based company says the funding round will help the company expand and allow it to establish new headquarters in San Francisco.
BitLendingClub's co-founder and CEO Kiril Gantchev told CoinDesk:
"The funding is an extremely important milestone for BitLendingClub. It has allowed us to validate our idea and to increase our efforts in the development of our platform."
LAUNCHub is a seed fund, based in Bulgaria, that invests in Southeast and Central European digital startups. Since 2012, the fund has invested and committed nearly €3.5m in 47 portfolio companies from nine countries in the region.
Bitcoin lending platform
BitLendingClub provides a peer-to-peer platform that brings bitcoin lenders and borrowers together. Using a 'Dutch auction' system, loans are offered and only accepted by borrowers when the interest rate drops low enough to match their requirements.
Borrowers can suggest interest rates they would prefer and can reject individual offers. This, the company said, guarantees that they will always get the best interest rate offered by the market. The average interest rate displayed on the firm's website is currently 17.62%.
In order to avoid loan defaults, BitLendingClub has partnered with a third-party document verification provider, Jumio, to validate borrowers' verification documents.
Since the launch in May, BitLendingClub has served over 2,200 loans, amounting to over 3,500 BTC (around $1.25m at today's exchange rate), according to figures provided by the company.
BitLendingClub is not alone in the bitcoin lending space, other companies like BTCJam offer a similar service. The website of that company claims lenders can earn 19.3% APR on their bitcoin.
Boost for the community
Gantchev described the seed round as an extremely positive development, not just for his company, but for the bitcoin community in Eastern Europe.
"We're one of a handful of startups with a presence in the area that have received funding from a local seed fund," he said. "The addition of BitLendingClub to the space clearly signals a strong interest in the region."
Gantchev believes that bitcoin provides a major opportunity for developers to move out of the more traditional tech outsourcing industry in the region and start building their own products.
"Product ownership leads to more innovation," he said, "so we're extremely excited for the future of bitcoin in the area. We're also thankful that LAUNCHub is also taking a leadership position, when it comes to funding bitcoin related startups."
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