We’re a little over a month into the New Year and already it’s shaping up to be another year of growth and momentum for both Prosper and the peer-to-peer finance industry. January was our biggest month ever, with a total of $67.06 million in loan originations. This momentum follows a very successful 2013, where we grew from just $9 million in loan originations when the new management team took over Prosper Marketplace in January, to $59 million in loan originations in December. Even more importantly in 2013, we focused on improving our customer experience for both borrowers and lenders, stabilizing the company, and setting ourselves up for continued growth in 2014.
Our goal since day one has been to provide a marketplace that disruptively changes the way borrowers and lenders gain access to personal lending and we remain steadfast to that goal as we head into 2014. To that end, we are investing heavily in product enhancements, great customer service, and an emphasis on our retail investors.
Commitment to All Investors
I have gotten a lot of questions and comments recently about the increase of institutional money in peer-to-peer lending. Over the past year, we essentially went from zero to 65% of the platform’s loans being sold to institutional lenders. Retail lenders are and always will be an indispensable component of our business. However, bringing on these institutional lenders was important to our ability to grow and scale. They added what we call “lender stability” to the platform and it allowed us to go out and market to borrowers with confidence that the loans would likely be funded quickly.
Despite that, we feel that the right balance between institutional and retail lender volume has not yet been achieved. In 2014, the goal is to enable retail lenders to get access to more loans in which to invest. Some of the ways that we are doing that is by limiting institutional access to the fractional loan pool and by simply not accepting new institutional money on the platform. I hope that as the year progresses, retail lending will invest in a meaningful percentage of the loans originated through the platform as we grow our overall volume.
We will continue to look at new ways to improve the retail lending experience and to grow loan volume and therefore make investing in loans easier. We are looking at new avenues to attract more borrowers to the site, including expanding our marketing channels with additional advertising and direct marketing. We are also exploring new partnerships that would give us valuable exposure to potential borrowers with innovative offers.
Finally, I want to address the removal of the Loan Description and Loan Details fields. In September, we addressed many of your questions and concerns on this topic. It’s something we were testing on the new borrower application and we hadn’t made any firm decision to permanently remove at that time. After an additional five months of testing, and the rapid growth we have seen since this change, we have decided to make the change permanent.
A look back at 2013
As I mentioned, 2013 was a great year for Prosper and the industry in general. We closed December with $59,775,615 in loans issued for the month, which is a 17.56% increase over November, 2013 and an astounding 522% increase over December, 2012. In 2013 a total of $357,437,811 in loans were originated through the platform, a 133% increase over 2012 and a 376% increase over 2011. You can see the growth demonstrated in the graph below.
We also made important changes to the business. Over the course of 2013, Steve, Ron and I recapitalized Prosper Marketplace, restructured the Board, and reorganized the management team into a group of focused professionals with a collective purpose. We also implemented customer-oriented solutions that helped to stabilize and legitimize the business. Some of the things we did include:
Established protection for all of the platform’s lenders regardless of size, by forming a new legal entity called Prosper Funding LLCProsper which is a wholly owned subsidiary of Prosper Marketplace and is now the owner of all loans tied to Notes and the issuer of all Notes on the Prosper platform.
Prosper Marketplace entered into an agreement to settle the class action lawsuit allowing us to move forward and focus on growing the business.
Brought on Institutional class customers to the platform to provide lender stability.
Improved the platform’s borrower experience and the technology infrastructure.
Hired a new Chief Product Officer of Prosper Marketplace and reoriented into a product focused organization.
Transitioned the platform over to the FICO 08® scoring model. This change more directly aligns Prosper with industry standards and enables us to better meet borrower expectations with rates and offers.
Scaled Prosper’s customer service operation to better meet the needs of both sides of our platform.
As we look ahead, we’re extremely optimistic about our growth, and project that loan originations will average just above $100M per month. We look forward to bringing our customers even better products and services, and continue to value your feedback.
It’s hard to believe it is December already. It’s been a couple of months since my last post, as we’ve been heads down and working hard on our platform as we plan for growth and increased originations. As you can imagine, we are excited about what we’re seeing on both the borrower and lender side of our marketplace. Although I was unable to get an October update up on the blog, we saw our biggest month ever in originations in that month – $50 million – and I am happy to report that November was another successful month with almost 10% growth in daily average originations over October.
In March, when I published my first monthly update here on the Prosper Blog, originations were $15.1 million for the month. This was a 60% increase over the previous month and just the beginning of the immense growth we’ve seen this year. November closes with over $46 million in loan originations, a 205% increase over March, 2013, and an astounding 369% increase over January, 2013 when the new management team took over.
By focusing on daily average originations and not trying to manage to a monthly gross originations number, we are aligning our interests with both our borrowers and lenders. Loans are originating as they fund on the platform – allowing for speedier funding for borrowers and faster bid to origination times for lenders. As of now, we are averaging only 4 days from the creation of a listing to origination (money in the borrower’s account), making us the fastest in the industry.
As a result of our strategy of not managing to a monthly growth number, you may see variable growth when looking at monthly originations based on the number of origination days in a month and some other seasonal factors. However, as you can see in the graph below, we have seen a 10% increase in daily origination numbers through November.
On a quarterly basis, with one month left, we see Q4* positioning upward still! We are excited about this increase moving into December.
We continue to make major improvements to the borrower experience. Over the past two months, we have built and launched a new feature that enables our borrowers to upload scanned documents directly to the website during their loan application process. Since the launch of this new feature, we have seen documents supplied more immediately, and, consequently, we are able to speed up our verification process and fund loans more quickly. See a review by Orchard on the improvement to this process. We expect an increasingly positive impact of this new functionality on the month’s performance as the process continues to improve.
You may have noticed some intermittent changes in the loan posting schedule over the past couple weeks. This is as a result of the recent borrower changes mentioned above. We are working to smooth this out, and things should be back on a regular schedule soon.
In light of recent growth, we are honored to have our parent company, Prosper Marketplace, ranked on two lists that recognize fast-growing private companies.
Ranked 12th on the “Fast 100,” a list of the fastest growing private companies in the Bay Area by the San Francisco Business Times. Prosper Marketplace earned its ranking on the October 2013 list with 532% revenue growth between 2010 and 2012.
Placed on the 2012 Inc. 500/5000, a list of the fastest growing private companies in the country.
Thanks, as always, for your feedback, comments, and suggestions. We appreciate hearing from you and are very excited about the future.
September was another eventful month for Prosper. We closed the month with $33.1 million in loans originated through the Prosper platform, marking the 7th straight month of record-setting loan originations.
Last month, I mentioned a series of changes made to the Prosper platform that we anticipated would have a positive impact overall. In September, we had the opportunity to see the initial impact of these changes and we are very excited at the results so far. September finished with $59 million in loan requests through the Prosper platform, a 24% increase over July’s loan requests of $47.6 million and our best month yet. October daily originations have benefited from the listing activity in the later part of September and we continue to see more and more borrowers finding loan options that meet their needs.
The two main changes impacting the results are:
Improved borrower experience: Early on in September we launched a new borrower onboarding experience that makes it easier for people to come to the Prosper website and quickly make their way through the borrower application process. Part of this change included the removal of the loan description and loan title fields. We have received extensive feedback from our lenders to add these fields back to the borrower application. We appreciate all your feedback and participation in this conversation. We are exploring options that will meet everyone’s needs and I will let you know when I have more information.
FICO 08® score transition: also early on in September, we transitioned over to the FICO 08® scoring model. This change, in conjunction with the Prosper Rating system, has strengthened our credit policy as anticipated. FICO 08® directly aligns us with industry standards and enables us to get more competitive with our rates and offers. Stay tuned for more feedback on the impact of this change.
We also had some other exciting announcements in September. To name a few;
Prosper Raises $25M in New Round: At the end of September, we announced that Prosper raised $25 million in additional funding to accelerate the company’s growth at a time when peer-to-peer lending is attracting a record number of borrowers and lenders. The round, which was led by existing partner Sequoia Capital, also included a new investment by BlackRock, the world’s largest asset manager. You can read more in the media articles linked below.
The New York Times DealBook: Prosper Raises $25 Million in New Round Adding BlackRock as a Backer VentureBeat: P2P Lending Platform Lines Coffers with $25M in New Funding TechCrunch: Lending Marketplace Prosper Locks down $25M from Sequoia, BlackRock
The Prosper TV Commercial: To get the word out to more people about the great opportunity to borrow through Prosper, we also launched an advertising campaign that will run across various cable channels including CNN, ESPN and Bloomberg. To view the commercial click here.
Welcome Dr. Elan Amir: Starting this month we have the good fortune to add Dr. Elan Amir to the Prosper Marketplace executive team. Elan joins us as Chief Product Officer. He brings with him a wealth of background and experience in product development, operations, and management. Read his complete bio here.
If you’re looking to get involved in the P2P conversations, Ron Suber, Head of Global Institutional Sales for Prosper Marketplace will be speaking at the following upcoming events in October.
Addressing the removal of the Loan Description & Loan Details Fields
Some of our lenders have expressed concern with the recent removal of the loan description and loan title fields on the Prosper borrower application. I want you all to know that we hear your concerns. This is something that we are currently testing. We have not made the decision to permanently remove these fields at this time.
I would like to take a moment to explain why we removed the fields and why we believe it will have a strong positive impact for our lenders long term.
Created Confusion – In recent user testing, we found that borrowers were significantly less likely to complete a Prosper loan application when they were asked to provide a Loan Description or Loan Title. Borrowers found this question to be intrusive and, in many cases, confusing to their private loan application process. These fields proved to be the biggest drop off point for potential borrowers. We removed them to gauge response for a period of time.
Supply and demand – We strive to have an onboarding process that is simple and easy and makes sense to users. The more simple a process can be made, the more potential borrowers we can reach. In order for Prosper to better streamline the borrower application and meet the demand that you all have expressed for new loans, we will consistently make changes to our platform that we believe will positively impact the way users interact with our product and ultimately, the way the platform performs.
Ultimately, we understand your concerns, and we are exploring the best way to meet both the lenders’ concerns and improve the borrowers’ experience at equal measure, including adding the field back in the near future. Standby for updates on this potential change and more as we begin to interpret its impact on our platform.
In my previous updates, I have mentioned that we are working on some exciting things here at Prosper this summer. This weekend, the Prosper team worked very hard to implement some much needed improvements and updates to the borrower onboarding experience. We are happy to announce these changes are complete and live on our site. We will resume our normal loan-posting schedule Monday at 9 AM. With this upgrade complete, we will be in a better position to bring more borrowers on to the platform and provide our lenders with a larger volume of loans to choose from. The key changes we made are:
Transition to FICO 08® Scoring Model: As we mentioned in our blog on this topic that a large portion of the technical upgrade this weekend was the transition to the FICO 08® Scoring model. Using FICO 08® in conjunction with our Prosper Rating will strengthen our credit policy by more directly aligning us with industry standards and will enable us to better meet borrower expectations with our rates and offers.
Improved borrower experience: We’ve recently released an optimized borrower experience on our website which will provide a smoother onboarding process for new borrowers. These changes include increased access points to customer service assistance (added an 800 number for live customer service), fewer field requirements, and a streamlined application process.
Our focus this year has been on building a foundation from which we can provide better service to borrowers and lenders along with scaling the activity on the platform in a more cost effective manner. This update was a critical part of achieving these goals. The Prosper platform will continue to evolve and grow as we understand the needs of our increasing member base.
Thank you for your patience this weekend while we worked on what turned out to be a very large implementation. Feel free to leave any questions, comments, feedback, etc. below.
Notice: Blogs and other materials posted on or linked from this page that use the name "Prosper" generally use that name to refer to Prosper Marketplace, Inc. if published before January 31, 2013 and to refer to Prosper Funding LLC if published on or after February 1, 2013.
As of February 1, 2013, the Prosper marketplace was transferred by Prosper Marketplace, Inc. to Prosper Funding LLC, a wholly-owned subsidiary of Prosper Marketplace, Inc. From and after February 1, 2013 Prosper Funding LLC is the sole obligator of Notes offered and secured by loans made through the Prosper marketplace, including Notes originally issues by Prosper Marketplace, Inc. prior to such transfer. Prosper Marketplace Inc. contiinues to provide services to Prosper Funding LLC relating to loan and Note servicing, and may interact with borrowers and investors in relation thereto as agent of Prosper Funding, LLC. Except where otherwise noted, throughout this website "Prosper" refers to Prosper Funding LLC including acting directly or through its agents.
All personal loans are made by WebBank, a Utah-chartered Industrial Bank. All Prosper personal loans are unsecured, fully amortizing personal loans.
Notes offered by Prospectus. Notes investors receive are dependent for payment on personal loans to borrowers. Not FDIC-insured; Investments may lose value; No Prosper or bank guarantee. Prosper does not verify all information provided by borrowers in listings. Investors should review the prospectus before investing.