It’s been a little over two months since CEO, Steve Vermut and Head of Global Institutional Sales, Ron Suber, joined Prosper’s management team, and this week, I am excited to be joining them full time as President. I wanted to let our community know that we intend to use this blog as a method of communication to continuously inform both our borrowers and lenders of what we are working on here at Prosper, and of what new and exciting things are coming in the near future. It’s important to all of us that our customers understand we are striving to make Prosper a leader in customer service and technology. With valuable feedback from our customers, we are able to deliver products and solutions that will enhance the user experience across the platform.
I want to give everyone an idea of all the exciting things the Prosper team has been working on since bringing on the new management team. In February, we focused on building and launching tools and improvements vital to the platform’s performance. Our new API gives lenders the tools they need to customize their Prosper experience in ways never before possible, and Prosper Funding LLC provides increased security and protection for our lenders. We also extended our customer service hours to provide more one-on-one support for more hours of the day.
As we come to the end of March, we’re excited to report $15.1 million in loan originations, a 60% growth over February and our best month since October. We also project $25 million in new loan listings on the platform this month. In fact, at the time of this post, there are 200 new loans now available to lenders.
We have also been looking at various ways to improve our service and product offerings for our retail and institutional lenders, as well as for our borrowers. Here are some of the priority items that we’re focusing on over the next few months (in no particular order):
• New Prosper Logo/Identity: Along with the technology enhancements to our product, on April 2nd we are launching a rebranded web experience including a new logo and identity. We have been working on this for a while and are excited about the changes. Let us know what you think.
• Improved collections: Over the past several months, we have focused on improving collections by increasing call intensity, and working with our delinquent borrowers to be the payment of choice during tax refund season. As a result of these changes, we have had 3 consecutive record months of collections. Moving forward, we will be adding a new collections agency and will send delinquent accounts to collections at 16 days past due rather than 31 days past due. This will enable us to expand our call coverage and skip tracing capabilities, which will provide better results for our lenders.
• Washington State (and more): We are currently engaged in communication with the Security Division of Washington’s Department of Finance and hope to reopen the platform to Washington lenders very soon. We apologize for the inconvenience to our Washington customers – the blackout is a result of the implementation of Prosper Funding LLC’s New Note Offering. With this implementation, we have also added West Virginia and Michigan, and plan to have several additional states join the platform in the near future.
• Whole Loans: In April we are launching a whole loan product in beta for our institutional lenders, which will be separate from our traditional pool of fractional loans. The beta version of this product is in test mode and we will communicate more details as they develop.
• Additional Improvements: Some of the many other things we are working on are a new IRA trading option on Foliofn, an increase in the loan cap on the platform to $35,000, enhancements to our Automated Quick Invest tool (AQI), and expansion to both our customer support and technology teams.
Steve, Ron and I are committed to creating a transparent relationship with our borrower and lender communities. This asset class and market place are changing rapidly. We will continue to make ourselves available to answer any questions. Please check back here regularly as I publish new posts with updates as well as gather questions and feedback from our community at large. We welcome any comments and/or questions below.
At the beginning of March, we announced the launch of our new, enhanced API service for lenders. The new API gives our lenders the tools they need to customize their Prosper experience, as well as build more robust tools in less time. Among other features, the new lender API service encompasses a RESTful interface which supports OData query operations, making it easier and more convenient for our lenders to code against. With the new API, we also offer more than 550 data points to each credit profile as well as individual Note details including specifics about payments and reasons for default.
As a result of launching this new API, effective May 1st, the existing API service will no longer be available. Over the next month, all lenders have the opportunity to convert and map their applications to the new API service, which offers a much more comprehensive set of data points, including access to raw listing data and enhanced data sets for analysis and reporting.
To obtain access to the new API for your lender account, please email us at firstname.lastname@example.org. We always welcome your comments and feedback below as well.
Over the past several months, Prosper has been working with the SEC on implementing an important new protection to offer enhanced safety and soundness for all lenders on the Prosper platform. We’re very happy to share that we are the first peer-to-peer lending platform to provide all of our lenders further security of assets. This industry-leading protection, along with our recent fundraising efforts and additions to the management team, represent important milestones for our customers.
First, some details on how this works. A new legal entity called Prosper Funding LLC has been established, which is a wholly owned subsidiary of Prosper Marketplace, Inc. Prosper Funding LLC is now the owner of all loans and the issuer of all Notes on the Prosper Marketplace. As a result, all Notes (both new and previously issued) are now fully protected in the unlikely event of a Prosper bankruptcy.
In order to purchase Notes from Prosper Funding LLC, lenders simply need to agree to the new registration agreement. If you have not done so already, you will be alerted to accept this agreement next time you sign into your account. New lenders are automatically registered with Prosper Funding LLC. In addition, you can review a “Risk Factors” section in the Prospectus for information regarding the risks and benefits of this new offering.
Thank you for your continued participation on the platform. This new protection demonstrates our ongoing commitment to bringing best-in-class tools and services to our lenders.
We are excited to announce three new enhancements that we believe provide our investors with more decision-making data than any other peer-to-peer lending platform.
Expanding Investor Data Access
First, we now support a CSV download format for a view of our loan performance data. For each loan, you will find a selection of credit attributes from the loan application as well as variables related to the performance of that loan, like final loan status and total principal and interest paid. By combining these sets of data, we have made it possible for investors to more easily construct and test their own investment strategies. This simplified data format will replace the more cumbersome XML format that we’ve used to date. Note that this means that certain types of data, including information related to group membership, member profiles, and bids, will no longer be available in the data export.
You can find the Loan Data Export file on our new Download page. (You can also access this page via the “Download Data” link on our Performance page while logged into your account.) This file will dynamically update on a daily basis.
Expanded Underwriting Information Preview
We are also working to make new sources of data available to guide your decision-making where we can. In 2011 we initiated a project to expand the amount of information considered when determining our Prosper Score. This expanded information will allow us to make better underwriting decisions across the platform, and we are also making it available to you today.
The first component of this data is the Expanded Underwriting Archive,also available on our Download page. The Archive file has a large number of application attributes and performance variables, allowing you to test and develop a wide variety of investment strategies.
Most of these variables are not yet available to investors through our API, however. To enable you to execute your new strategies based on the expanded dataset in the short term, we are also making available a Recent Listings Sample with Expanded Underwriting Data. This file includes a sub-set of recent listings for which we have these expanded bureau attributes.
Finally, we are releasing an Underwriting Archive Data Dictionary for use with the Archive and Listings Samples. There is a lot of data included in those files, but the Data Dictionary should make it easy to understand what you’re working with.
We are truly excited about these developments and believe that they provide our investors with far more information than any other investment platform. Thank you for continuing to invest with Prosper, and please contact us directly at email@example.com or leave a comment below if you have any questions about the new data enhancements.
September was an eventful month at Prosper and for a number of reasons. First, we had the good fortune to have Josh Tonderys, previously Senior Director at Barclaycard US, join the Prosper team as our Chief Risk Officer. He brings a wealth of direct credit experience that will help us scale the platform while continuing to provide strong investor returns. Second, we were listed 4th on The Wall Street Journal’s list of the Top 50 Venture-Backed Start-Ups for 2012. Third, we set monthly records for originations, listings, and cash on the platform in September. All in all, a great month!
With $16 million in originations in September, Prosper continues to focus on providing a high yield, short duration alternative for investors. Which brings us to this month’s commentary from our Chief Investment Officer, Joe Toms.
LOOKING FOR YIELD: DURATION RISK VERSUS CREDIT RISK IN FIXED INCOME
I recently came across an article that quoted Paul O’Brien, head of fixed income at the Abu Dhabi Investment Authority (with estimated assets under management of $627 billion), that we felt perfectly summarized the challenges confronting fixed income investors today. He writes:
“The return for bearing duration risk is the lowest it has been in our careers. The return for credit risk, on the other hand, is probably average. If you take the history as a benchmark, then it’s fair to say that the return from fixed income is probably better served by taking credit exposure, rather than duration exposure.”
We think this quote confirms the point we have been making over the past year, that short-duration, high-yield portfolios like Prosper’s allow investors the opportunity to generate yield while taking little interest-rate risk.
Consider the historical evidence of Prosper 2.0 vintages that are at least 12 months old. The data shows not only the stability of the different vintages but that, by the end of month 12, the vintages returned to the investor 50% of their initial investment. In other words, through the combination of prepayments, straight line amortization of principal and interest, investors receive a tremendous amount of cash flow early on in the investment.
This high cash flow provides a number of clear and substantive benefits. It reduces interest rate risk while providing tremendous flexibility to either re-invest in Prosper Loans and/or allocate to other promising investments. In short, it allows investors to earn a considerable premium in yield relative to most other fixed income investments with little interest rate risk while providing significant cash flows. While admittedly biased, we think that the combination of high yields, short durations and strong cash flows make a compelling investment case.
More information on September’s monthly performance update can be found here. For further explanation of this commentary or with any other questions or comments, please contact our investor marketing team at firstname.lastname@example.org or 1-877-611-8797.
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.