Looking Glass Investments launches second fund

One investor has contributed $5 million

Whitefish Bay-based Looking Glass Investments on Monday launched its second fund, which has already raised $5 million from one investor.

O’Malley with Looking Glass employees Andrew Siefkes, Dustin Fix and Brad Darnell.

Looking Glass president and COO Matt O’Malley with employees Andrew Siefkes, Dustin Fix and Brad Darnell.

According to an SEC filing, the offering for the pooled investment fund, LGI SPV II LLC, will last more than a year. The minimum accepted from any outside investor is $250,000.

The total offering amount was undisclosed. The fund is open ended, said Matt O’Malley, president and chief operating officer of Looking Glass.

Looking Glass was launched in January 2014 with $5.5 million in seed capital from small institutional accredited friends and family. That first fund, which hit $8 million at its peak, will now go into runoff. Investors who will also be investing in the second fund will flow their capital into the new pool, he said.

“We are asking a select number of investors from Fund I to join us in Fund II,” O’Malley said.

Looking Glass now has 100 investors and more than $20 million in assets under management, O’Malley said. In December, Houston-based Main Street Capital Corp., one of its investors, purchased an equity stake in the company.

The firm buys marketplace loans on lending sites Funding Circle, LendingClub, Peerform and Prosper. Using its custom predictive analytics software, LGI evaluates and underwrites loans it has determined are unlikely to default. In 2015, it analyzed $6.2 billion in potential loans and invested about $21 million in 10,000 loans. The alternative investment model promises investors a less volatile environment than the equity markets.

But the industry has also seen its share of challenges. LendingClub CEO Renaud Laplanche recently resigned amid a scandal surrounding the company’s internal controls, specifically his failure to disclose his personal investment in a customer of LendingClub.

“It was a challenging time for the industry” but the fact that internal controls caught the issue and it was reported to the market voluntarily is a good sign, O’Malley said. “We obviously have strong relationships at LendingClub and we felt as if they handled it extremely well.”

This second fund will include more out-of-state investors who are able to contribute a higher minimum investment, O’Malley said.

“The purpose of this new fund is that we do have a new category of investor,” he said. “We’ll still be working with accredited investors but we’re shifting a bit of our focus to institutional investors as well. We’re increasing the amount that is invested and we have a new class of investor that we’ll be adding.”

Whitefish Bay-based Looking Glass Investments on Monday launched its second fund, which has already raised $5 million from one investor.

O’Malley with Looking Glass employees Andrew Siefkes, Dustin Fix and Brad Darnell.

Looking Glass president and COO Matt O’Malley with employees Andrew Siefkes, Dustin Fix and Brad Darnell.

According to an SEC filing, the offering for the pooled investment fund, LGI SPV II LLC, will last more than a year. The minimum accepted from any outside investor is $250,000.

The total offering amount was undisclosed. The fund is open ended, said Matt O’Malley, president and chief operating officer of Looking Glass.

Looking Glass was launched in January 2014 with $5.5 million in seed capital from small institutional accredited friends and family. That first fund, which hit $8 million at its peak, will now go into runoff. Investors who will also be investing in the second fund will flow their capital into the new pool, he said.

“We are asking a select number of investors from Fund I to join us in Fund II,” O’Malley said.

Looking Glass now has 100 investors and more than $20 million in assets under management, O’Malley said. In December, Houston-based Main Street Capital Corp., one of its investors, purchased an equity stake in the company.

The firm buys marketplace loans on lending sites Funding Circle, LendingClub, Peerform and Prosper. Using its custom predictive analytics software, LGI evaluates and underwrites loans it has determined are unlikely to default. In 2015, it analyzed $6.2 billion in potential loans and invested about $21 million in 10,000 loans. The alternative investment model promises investors a less volatile environment than the equity markets.

But the industry has also seen its share of challenges. LendingClub CEO Renaud Laplanche recently resigned amid a scandal surrounding the company’s internal controls, specifically his failure to disclose his personal investment in a customer of LendingClub.

“It was a challenging time for the industry” but the fact that internal controls caught the issue and it was reported to the market voluntarily is a good sign, O’Malley said. “We obviously have strong relationships at LendingClub and we felt as if they handled it extremely well.”

This second fund will include more out-of-state investors who are able to contribute a higher minimum investment, O’Malley said.

“The purpose of this new fund is that we do have a new category of investor,” he said. “We’ll still be working with accredited investors but we’re shifting a bit of our focus to institutional investors as well. We’re increasing the amount that is invested and we have a new class of investor that we’ll be adding.”

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