prosper.com microfinance - svmn.net mtg 2007-09-10

Prosper Marketplace

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Prosper is like an “eBay for Money”

• Marketplace for money– Brings together borrowers with people who have money to lend– Administers lending process including payments and collections

• New asset class– Anyone with as little as $50 can lend– Community decides where and why to grant credit

• Leverages power of community– Groups and endorsements provide shame, acquisition and support

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Institutional Markets - Wall Street

Existing Consumer Credit Markets

Community Lending - Early US S & L’s - Informal Asian Lending

= Borrowers = Lenders

• Good: borrower shame/loyalty• Good: low marketing costs• Bad: risky - no diversification

• Good: great diversification• Bad: no borrower loyalty• Bad: high marketing costs

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Prosper combines best of both markets

= Lenders = Borrowers = Group Leader

Lenderdiversification Group

Leadermarketing

Borrowerreputation

Friends,Endorsements

reputation/marketing

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Market Size – Unsecured consumer credit

• $900 billion US credit card market

• Announced Japan JV - $200 billion market

Source: SMR Research 2005 and

Financial Services Agency of Japan 2006

$886 $923 $962 $1,002

$-

$200

$400

$600

$800

$1,000

$1,200

2006 2007 2008 2009

year

(billio

ns)

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Prosper Stats

Users: 410,000

Loans by $: $87,000,000

Borrower Loans: 15,000

Promissory Notes: + 1.2 million

Payments to Lenders: 2,500,000

Discussion Posts: 370,000

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Backing

• VC Backing– $40 million raised

• Outside Directors– Jim Breyer, Accel Partners

• Wal-Mart, Facebook

– Bob Kagle, Benchmark Capital• eBay, E-Loan

– Larry Cheng, Fidelity Ventures• Verid Board

– Paul Hazen• Former CEO Wells Fargo

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Listings

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Listing Summary

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Group Information

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Endorsements from Friends

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Bid History

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Deep Operational Integration

Scheduled: June ‘07

Scheduled: Fall ‘07

Banking and Finance

Collection Agencies

Credit Reporting AgenciesAnti-Crime Scheduled: Fall ‘07

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First Wave (Web 1.0)

• What was New:– Streamlined existing processes– Value creation = disintermediation

• What was the Same:– Source of value was the company– Company dictated the product

• What was New:– Streamlined existing processes– Value creation = disintermediation

• What was the Same:– Source of value was the company– Company dictated the product

Offline Online Product Books

Stocks

Loans

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Second Wave (Web 2.0)

• What is New– The Source of Value changed

• The Company The People

– The Company’s Role changed• Central Role Supporting Role

– The Exchange of Value changed• Company-to-People People-to-People

• What is New– The Source of Value changed

• The Company The People

– The Company’s Role changed• Central Role Supporting Role

– The Exchange of Value changed• Company-to-People People-to-People

Web 1.0 Web 2.0 Product Video

Guides Loans

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But what about all the other Web 2.0 Stuff?

• XML• AJAX• ASP• RSS• Wiki• SOAP and WSDL API’s • Big Rounded Logos

X No People

= No Value

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What if there were no people?

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Range Of Issues

• State licensing requirements • State usury and fee limitations • Securities laws – state & federal • State disclosure requirements and other lending regulations • Truth in Lending Act • Equal Credit Opportunity Act/discrimination laws• Fair Credit Reporting Act • Fair Debt Collection Practices Act/state collection laws • Electronic Funds Transfer Act • E-SIGN Act/Uniform Electronic Transactions Act/UCC Article 3 • FTC Act and Unfair and Deceptive Trade Practices Acts • Federal (Gramm-Leach-Bliley Act) and state privacy laws • Data security laws • Bank Secrecy Act/USA PATRIOT Act/OFAC • Money Transmitter Licensing • Federal Deposit Insurance • Bankruptcy • Tax • Website agreements and disclosures • ACH authorizations• Communications Decency Act