Prosper Marketplace

Prosper Marketplace, Inc.

TypePrivate
IndustryFinancial technology, Peer-to-peer lending
FoundedCalifornia, USA (2005)
HeadquartersSan Francisco, CA
Area servedUnited States
ProductsPersonal marketplace
Websitewww.prosper.com
  • Prosper Funding LLC, one of its subsidiaries, operates Prosper.com, a website where individuals can either invest in personal loans or request to borrow money.
  • Prosper Marketplace is a peer-to-peer lending marketplace.
    • Borrowers request personal loans on Prosper
    • Investors (individual or institutional) can fund anywhere from $2,000 to $40,000 per loan request.
    • Investors can consider borrowers’ credit scores, ratings, and histories and the category of the loan.
    • Prosper handles the servicing of the loan and collects and distributes borrower payments and interest back to the loan investors.
    • Prosper verifies borrowers' identities and select personal data before funding loans and manages all stages of loan servicing.
    • Prosper's unsecured personal loans are fully amortized over a period of three or five years, with no pre-payment penalties.
  • Prosper generates revenue by collecting a one-time fee on funded loans from borrowers and assessing an annual loan servicing fee to investors.
    • Prosper has a transaction-based business model, in which the company collects revenue by taking a fee on its customers' transactions.
    • Borrowers who receive a loan, pay an origination fee of 1.00% to 5.00%, depending on the borrower's Prosper Rating, and investors pay a 1% annual servicing fee.
  • Prosper use pre-set rates determined solely by Prosper based on a formula evaluating each prospective borrower's credit risk.
  • Lenders choose whether or not to invest at the rate which Prosper's loan pricing algorithm assigns to the loan after it analyzes the borrower's credit report and financial information.
  • All transactions are in US dollars; lenders and borrowers must be US residents.
  • Evaluation of credit risk
    • Prosper provided a proprietary “Prosper Rating” for prospective borrowers based on the company's estimation of that borrower's “estimated loss rate”.
    • According to the company, that figure is “determined by two scores:
      • (1) the credit score, obtained from an official credit reporting agency,
      • (2) the Prosper Score, figured in-house.
  • Prosper publishes performance statistics on its website and all market data is available to the public for analysis.
    • Prosper maintains a full public database of all loans issued through its marketplace on its website.
    • This database and all market statistics can be accessed and queried for analysis of loan performance over time.
  • Prosper is backed by BlackRock, Sequoia Capital, Accel Partners, Agilus Ventures, Benchmark Capital, CrossLink Capital, DAG Ventures, Draper Fisher Jurvetson, Fidelity Ventures, Omidyar Network (an investment vehicle of eBay founder Pierre Omidyar), Meritech Capital Partners, TomorrowVentures (an investment vehicle of Google Executive Chairman Eric Schmidt), and QED Investors (an investment vehicle of CapitalOne co-founder Nigel Morris).

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