P2P-Banking.com

A Bloomberg article reports that Prosper seeks to be regulated like a bank in order to avoid the jurisdiction of the SEC.

One of the biggest challenges for a new internet startup to offer an innovative financial service is to gain the trust of its potential customers. Consumers approach new concepts with legitimate caution.

The book ‘P2P Kredite – Marktplätze für Privatkredite im Internet‘ examines how p2p lending services can address the uncertainties and what measures can be used to build trust. After a short introduction of how p2p lending works and a look at Cashare, Smava, Zopa and Prosper the author covers the aspects credibility, safety, reputation, guarantee, sanctions, information and communication. Fabian Blaesi also describes how community features can help.

In an empirical study the importance of several factors for the perception and acceptance of p2p lending services by lenders is quantified.

The book is available at Amazon.com, Amazon.co.uk, Amazon.de and Amazon.co.jp.

Fred’s blog has an analysis of the financial data of the series D funding round Prosper Marketplace recently completed. The analysis shows that the valuation by the VCs per share issued dropped from 9.69 US$ per share in round C (June 2007) to 0.72 US$ per share in round D.

Prosper Marketplace Inc., has successfully closed a the new funding round, which it announced two weeks ago.  Prosper receives 14.7 million US$ from new investors Tomorrow Ventures and CompuCredit Holdings and existing investors Accel Partners, Benchmark Capital, DAG Ventures, Meritech Capital Partners, Omidyar Network, QED Investors and Volition Capital. TomorrowVentures is the investment vehicle for Google CEO Eric Schmidt.

Peer to Peer lending service Prosper is raising it’s fourth funding round. The company announced it is raising between 13.3 and 15.8 million US$. Prosper expects the deal to be closed by April 15th and says a LOI has been signed with new and existing investors.

People Capital, a website for college students to obtain student loans via an online lending exchange, and Prosper.com have announced a referral partnership to help borrowers seeking both educational and non-educational loans on their respective Web sites. Borrowers who are unable to obtain educational loans that meet their financing needs on Prosper.com will be offered the opportunity to access the People Capital lending exchange. In return, People Capital will refer its Web borrowers, who are interested in taking out non-educational loans, to Prosper.

People Capital is currently in Beta.

Earlier examples of p2p lending services referring leads that could not be funded on their platform to another service were Zopa selling leads of low credit grade borrowers and Prosper refering loan applicants to other sites while Prosper was closed to new borrowers during SEC registration.

Prosper.com has added a website version for mobile use.

One interesting – though unrelated – fact: While on most western marketplaces “conventional” internet access dominates, over 90% of the users of Estonian Isepankur.ee access the site via mobile phone.

As the end of 2009 approaches here is a selection of main news and developments covered by P2P-Banking.com:

• January: Smava expands into Poland (interview); Pertuity Direct launched; German Smava raises fees; total global p2p lending loan volume is about 740 million US$
• February: Sobralaen launches in Estonia (later renamed Isepankur)
• March: Lending Club receives 12M US$ in VC funding and introduces self-directed IRA; Dutch p2p lending service Boober fails
• April: Aqush launches friends and family loans in Japan; Prosper very briefly reopens
• May: Vittana launch; IOU Central files SEC registration to open in the US; United Prosperity launches with a loan guarantee microfinance model
• June: Spanish bank Caja Navarra experiments with own p2p lending platform; my article ‘For Debate: A Flaw in Current P2P Lending Models?‘ gets quite some email feedback; Kiva launches with loans to US businesses; Loanio SEC filing; Zopa prospers in the UK; P2P Lending Services in Germany get a boost by media coverage; Kiva enacts currency risk coverage changes
• July: Prosper reopens with SEC approval and starts secondary market
• August: Blogs discus whether p2p lending is or will become disruptive; Pertuity Direct closes after only 7 month of operations
• September: Smava Poland interview; the article ‘P2P Lending Technology – Make or Buy‘ is one of the most-read and the most commented article in 2009
• October: Moneyauction booms in Korea
• November: Kiva surpasses 100 million US$ in loans; Prosper and MYC4 have problems with non-payments/defaults; Virgin Money exits US p2p lending market
• MYC4 reduces staff

Off to new shores (Photo credit: Nattu)

P2P Lending Company Prosper Marketplace (Prosper.com) has hired Nick Talwar, former head of Citibank Sweden. Talwar’s task as Chief Revenue Officer will be to bring Prosper back on a growth track.

As reported earlier Prosper is currently experiencing high losses and struggling to reconnect with earlier growth rates.

Prosper Marketplace, Inc. the company running the p2p lending site Prosper.com had a net loss of 2,238,138 US$ in the third quarter of 2009. Furthermore Prosper’s cash reserve is low. As of September 30th, 2009 Prosper had 2,079,624 US$ cash and cash equivalents left from an initial VC funding of 40 million US$. Even accounting for the recent 1 million US$ investment of a banker, at the current burn rate Prosper will need new funding soon.

However the timing and circumstances make chances for a new VC round look less than ideal.
Prosper reopened the site for new loans after completing the SEC registration process in July 2009, but still struggles to reach growth rates the marketplace had in 2007 and 2008.

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