Prosper Receives a New Round of Funding

I have been out in San Francisco this week visiting with the management teams at Prosper and Lending Club. I arrived at the Prosper offices yesterday morning and was greeted by some big news. CEO Chris Larsen shared that they have just received a new round of venture capital funding.

Here are the details of this funding round. Prosper issued 8,996,739 shares of its Series F Preferred Stock to a group of new investors that includes IDG Capital Partners for an aggregate purchase price of $9.0 million. Prosper will not be issuing a press release about this funding and they have given me permission to make this announcement.

This funding was unsolicited and came at a higher valuation than the round that closed in June. It brings the total cash on their balance sheet to over $25 million and gives them even more flexibility now to ramp up operations. The mood at Prosper headquarters was understandably jubilant when Chris Larsen announced the news to employees.

I think this funding is great news not just for Prosper but for all of peer to peer lending. Their CFO stated to me yesterday that Prosper expects to reach break even in 12-18 months at somewhere around $30 million in new loans per month. This new funding should easily see them past that point even allowing for slower growth than expected.

All p2p investors benefit from having two strong and successful competitors. It certainly looks like we have that now. The future keeps looking brighter for peer to peer lending.

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matt feldman
matt feldman
Nov. 4, 2011 2:18 pm

why wouldn’t prosper or lending club use it’s own services to raise money? Kinda like Uhaul?

Dan B
Dan B
Nov. 4, 2011 3:15 pm

By “unsolicited” I assume you mean that Prosper didn’t have to pay someone a “fee” to round up the financing……………like they’ve done the last several times. Am i right?

Matthew Paulson
Nov. 4, 2011 3:20 pm

Basically, IDG went to Prosper and said they wanted to invest. IDG offered a good valuation. Prosper would be dumb to say no to the $.

Chris
Chris
Nov. 4, 2011 5:01 pm

Peter, thanks for sharing – especially since there was no planned public announcement for this information. Come to think of it, thanks for getting on a plane and meeting with the movers of this industry. It helps the rest of us know what is going on.

312-lender
312-lender
Nov. 5, 2011 12:39 am

Peter —

Can you tell us what’s coming down the pipe line?

Charlie H
Charlie H
Nov. 5, 2011 5:28 am

~$1 a share is that right?

Dan B
Dan B
Nov. 7, 2011 3:41 pm

So their CFO expects to go from $8 million to $30 million in 12-18 months huh? Perhaps in Fantasyland. But that’s ok, because in 12-18 months no one is going to remember or care that he stated this…………thereby keeping the door open to more & more ridiculous statements. That’s the beauty of the internet.

CA-Lender
CA-Lender
Nov. 7, 2011 4:08 pm

@Chris & Peter

$30M per month in 12-18, would require appr. 10% month over month growth!

Prosper has been growing 10% month (based on current 7M-8M/month, with worth-blanket putting in around 15-20% of that volume.)

Do you think it is realistic to hit $30M/mo, even in 18 months? (I would love to see it, but I think those amounts are a bit optimistic, even if WB continues with $1.5M/mo)?

Glenn G. Millar
Nov. 7, 2011 6:55 pm

Peter,

Thanks for your continued coverage and interest in the entire peer-to-peer lending industry. You’re quickly becoming the Tom Brokaw of our industry, the steady trusted source that informs, educates and presents all sides.

Glenn G. Millar
Prosper Employee

Dan B
Dan B
Nov. 8, 2011 8:36 am

Peter…………Yeah except that you forget that it’s a helluva lot easier to go from $8.7 million to $25 million in 18 months when your average loan is $12k rather than under $7k.

How many more borrowers per month did Lending Club have to attract to achieve your 8.7 to 25 million in 18 months? 1200? 1300? Now do the math for Prosper. It’s enormously different.

Dan B
Dan B
Nov. 8, 2011 4:47 pm

Peter…….one of these days you’ve got to show me how you do your calculations. To get to $29 million they will need around 4000 borrowers a month. They’re at 1200 now. A 5% monthly growth compounded for 18 months will not get you from 1200 to 4000. Not even close.

Dan B
Dan B
Nov. 9, 2011 4:50 am

Think nothing of it Peter. I still think the projections are way too optimistic but we’ll see. On a more optimistic note, Prosper does seem to be having a very solid November so far. Looks like they will set a new all time volume record before the end of the year.