The current management team at Prosper continues to provide us with pleasant surprises. Today, they announced they have closed an additional funding round totaling $25 million led by existing investor Sequoia Capital and newcomer to the space BlackRock.
The addition of BlackRock was quite a surprise. Although, I was told in my meetings at Prosper headquarters a couple of weeks back that this round was coming and a very big name was participating. And they don’t get much bigger than BlackRock. They are the world’s largest asset manager with a staggering $3.9 trillion under management. Brian Stern, a Managing Director at BlackRock and a senior member of BlackRock Alternative Investors is the person quoted in the press release.
What is interesting to me is that, just like in January, Sequoia led this funding round. They obviously like what they have seen from Prosper over the last eight months and so they doubled down on their investment. But what is even more interesting is that a big name like BlackRock had p2p lending on their radar. Not only that but they were following it closely enough to want to make an investment here. This is yet another indication of the movement towards the mainstream for this new asset class.
Over a $100 Million Valuation
When the new executive team took over in January Prosper was valued at around $38 million. Today, just eight months later I was told by a reliable source that their pre-money valuation on this deal was over $100 million. That is impressive. Not only that but they said that they could have easily raised more than $25 million if they had wished – even at this much higher valuation. There was a lot of appetite from the VC community and they had to turn some investors away.
This $25 million brings the total raised by Prosper since their inception to $119.9 million, of which $45 million has been raised this year. Maybe this will be the last cash infusion although we certainly can’t rule out another one. Personally, I would like to see Prosper take this latest funding and ride it all the way through to profitability.
Now, with the class action lawsuit behind them, a large cash war chest and an ever increasing top line Prosper has everything going for them. With growing investor interest and a more efficient borrower funnel it should be smooth sailing ahead for Prosper.
You can also read about this story in the New York Times and Techcrunch.
Peter,
Without me digging through their recent 10-Q filings, do you know off the top of your head what Prosper’s current cash on hand is, with this $25M, and what their monthly cash burn rate is?
Thanks,
CA-Lender
It depends on how you count the money. Remember that Prosper has to pay $2 million out on the settlement some time next year. But even setting that aside, before this round of financing, Prosper had no more than around $2-3 million in cash. Prosper is bleeding at the rate of $68k………………per day.
Oops, my mistake. I meant to say $3-4 million in cash. Hey, a million here, a million there, what’s the big deal anyway, right? 🙂
Dan,
Thanks for that info…
Any idea on the approximate monthly loan volume they’d need to be “break-even”? $60M, $80M?
It’s hard to provide an accurate estimate for a break-even volume at this point as their expenses have been rising (disproportionately so, as of late) due to borrower acquisition costs and other activities.
We’ll have to wait for the next 10-Q for better characterization.
If I had to guess I would say the break even point at Prosper will come at around $80 million a month or so. They may well incur significant losses for another couple of quarters. But as Dan B said over on the forum:
However, deep pockets can allow a business a very long time to turn things around if it so wishes & I don’t think anyone doubts that Prospers current backers have very very deep pockets. So it is entirely possible that they’re working a plan that has a longer time frame in mind & may be relatively unconcerned with increasing losses this quarter or next.