Prosper Announces $165 Million Series D at a $1.9 Billion Valuation

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On the eve of LendIt last year Prosper announced their largest funding round ever – a $70 million round that valued the company at $600 million. This year, with LendIt just days away, they have upped the ante with the announcement last night of a $165 million round at a whopping $1.865 billion valuation.

Prosper has welcomed many new equity investors into this round. Interestingly, there are quite a few banking names on this list: Credit Suisse NEXT Investors, part of Credit Suisse Asset Management, J.P. Morgan Asset Management, SunTrust Banks and USAA. There were several others in the round but these were the major banking names.

I reached out to Prosper CEO, Aaron Vermut, to discuss this new round and what it means for Prosper and the industry. When I mentioned all the banking names in this round he acknowledged that banks in general are very much interested in the space right now. And the asset management arms of large investment banks like Credit Suisse and J.P. Morgan are also looking to deploy money on the Prosper platform for their clients.

Focused on Growth

When I asked Aaron what he was going to use this money for he said that Prosper is focused on growth and “professionalizing the business”. By this he means improving some of the areas where Prosper is not where they want to be today. This includes improving the investor experience for retail investors, something that has been on their to-do list for a while, but it looks like a new investor platform is finally going to happen this year.

Prosper will be hiring more engineers, more bizdev people, offline marketers and investor services people. In fact there will be hiring in most areas of their business as they expect to grow from 310 people today to over 600 people a year from now.

While Prosper did have two profitable quarters last year, Aaron said he does not expect Prosper to turn a profit this year. They are investing in their business and profitability is not a near-term priority. He doesn’t expect a big loss either but Prosper is going to be “investing in their business with intent.”

No IPO This Year

I asked the obvious question that I am sure Aaron gets sick of answering. After the successful Lending Club IPO everyone wants to know when Prosper is planning to go public. While he has often said that there are no immediate plans to explore that possibility Aaron went a little further in our conversation and said there are no plans this year to do an IPO. He said they have a lot of improvements they want to make before exploring that possibility.

A Record First Quarter

Back in January, Prosper stopped updating their loan volume on a daily basis. So, we had no idea how the first quarter went until now. Not surprisingly, it was a very strong quarter with $595 million of new loans originated. This was up from $540 million in Q4 last year and $195 million from the year ago quarter.

This growth and the new funding round certainly solidifies Prosper’s position and will help them compete with Lending Club as well as the newer entrants in the space.

The industry is clearly maturing. And maybe on the eve of LendIt next year we will hear another big announcement from Prosper…an IPO possibly? It will be a very interesting next 12 months that’s for sure.

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Apr. 9, 2015 6:36 am

Prosper is out executing Lending Club. Smarter, hungrier, more aggressive. Good for them. Team is top notch.

Ed Nigma
Ed Nigma
Apr. 9, 2015 7:04 pm
Reply to  Observer

Not sure I would jump on that statements bandwagon. Prosper is a one trick pony compared to Lending Club right now. Gaining volume – Yes, diversifying the business – No.

Not sure what the number is but I’ll bet that 85%+ loans go to 1 specific group of lenders. Pretty scary if something changes internally with those lenders. Also, would like to see additional products being introduced.

I am excited about what they are doing don’t get me wrong. I just think LC will be the better company in a space with ample room for many large players

Apr. 10, 2015 8:03 am

Hi Ed – I appreciate your point. But until LC reveals how much volume they do outside their core business I don’t think anyone can claim they have truly diversified. As I understand it their SMB segment is very small.

Apr. 10, 2015 8:16 am

I would really like to see LC or Prosper figure out how to do secure lending a la vehicle financing and home mortgages. Asset backed lending would be tricky, but I think it would be very appealing for investors.

Apr. 10, 2015 11:50 am
Reply to  Jacob

There are a few out there trying to do that, it would be an easy purchase at the early stages for Prosper or LC. Prosper needs to do something with their cash..

RoadRate is launching soon – started by one of the early guys at LC. That’s a perfect set up for getting a product up and running, and then get bought.