May 3 will go down as a dark day in the history of this industry. First, we had OnDeck’s stock down 34% today after disappointing earnings announced last night. Now we have the first ever major round of layoffs as Prosper announced today they are letting go 171 people or almost 28% of its workforce.

I spoke with representatives from Prosper this afternoon about this big news. But before I get into that conversation below is the official statement from CEO Aaron Vermut:

It’s very difficult to say goodbye to our colleagues, and we’re grateful for their many contributions. Over the past year we invested for growth, but with the recent tightening of the capital markets we are refocusing on our core consumer loans business and building more resiliency into the company. This includes our key asset Prosper Daily. The Prosper loan portfolio continues to perform and meet investor expectations, and as we move forward, our priority remains on underwriting and servicing a high-quality loan product. We’re making these changes now from a position of strength to ensure we continue on our path to long-term success.

Early last year Prosper made their first acquisition that of healthcare lender, American Healthcare Lending. Soon after they announced a new point-of-sale product that they would be trialling through this new healthcare division. This new product did not work out as planned and the majority of layoffs are coming from this division. [Read more…]