In early 2013, when my partners, Steve and Ron, and I joined Prosper Marketplace, this company and this industry were in a vastly different place. Prosper Marketplace had just closed out 2012 with $150 million in loans originated through the platform, 85 employees, and frankly, a future that was very much in question. At the time, we had no expectation that Prosper would reach the kind of loan volume it is doing today. We just knew that Prosper could help people get out from burdensome high-rate debt and be a better option for paying for large-ticket purchases. We set to work building, hiring and fixing things here, with the goal of bringing in the best people and scaling the business
Back in the second quarter of 2013 (our first full quarter at the company) Prosper originated $72 million in total loans through the platform. Fast-forward two years, and we just closed out our largest quarter ever — $912 million in loans originations through the platform, a staggering increase of 1166% in two years. This brings us to another milestone – today, we crossed more than $4 billion in loans on the platform since launching in 2006. This growth has not come at the expense of quality – we continue to deliver excellent loan performance and the quality of our loans is stronger than ever.
As we look toward the second half of the year we see that Prosper is currently on track to double the $1.6 billion in loans originated through the platform in 2014, which in itself was a record (and a 350% increase from 2013). These numbers underscore the continued growth and momentum of marketplace lending as it moves toward mainstream awareness. More and more people are realizing that marketplaces and online lending are a better way to borrow and invest. And the industry is noticing as well. So far this year, Prosper Marketplace has been named one of Forbes Magazine’s Most Promising Companies of 2015, and AlwaysOn named Prosper Marketplace the OnFinance Company of the Year, as well as one of their Global 250 Top Private Companies.
Our focus remains on bringing consumer-friendly personal loans to more people, and making changes to improve the experience for both its borrowers and investors. This includes launching a responsive website that functions across desktop and mobile devices, and making continued improvements to the verification process so it is a fast and streamlined experience. We are seeing more people come back for their second loan through Prosper, as well as a wider variety of use cases beyond debt consolidation, such as large purchases, medical expenses, and home improvement projects.
Prosper is also making improvements for its retail investors, which remain a core part of the Prosper investor community. In April Prosper introduced an update that gives retail investors better visibility into pending orders and makes it easier for them to access data. In the coming months there will also be more data analytics and account management tools to improve investors’ experience using the platform. As Prosper works to broaden access for retail investors, we also saw the launch of the first publicly traded fund through River North, a significant move toward broadening retail access to marketplace loans.
To keep up with all of this growth, Prosper Marketplace continues to grow its team in all of its locations. We now have more than 457 employees with offices in San Francisco (recently named one of the coolest offices in the Bay Area by the SF Business Times), Salt Lake City (where we just opened a new office), and Phoenix (where we now have 130 people focused on customer service and verification). This year alone, we have doubled the size of our engineering team and we’re still hiring across all functions. If you are interested in what we are building, check out the jobs section of our website.
We are proud to have pioneered the online lending market and to operate one of the largest platforms in the world today, with much more growth in store. We continue to be inspired our customer stories, and believe in our mission to help people achieve financial well being. Thank you to the entire community, from all of us here.
We’ve just wrapped up 2014 and what a year it has been for everyone in our industry. First and foremost we want to say thank you to our customers, partners and investors. We could not have done it without you.
One of the big highlights of 2014 was our $2 Billion Strong Photo and Video Contests. We heard amazing stories from every corner of the country that reminded us of why we do what we do everyday. If you haven’t had a chance to check out the gallery, the videos and photos are still available on our Facebook page. In addition to the winners, here are a few more of my favorite videos:
In December, we reached $205 million in loan originations through the Prosper platform – our largest month ever and a great finale to the year. In total in 2014, there was $1.6 billion in loan originations on the Prosper platform and more than 123,000 people have turned to the platform for loans for everything from home improvement to debt consolidation to medical procedures as highlighted in the videos and photos above. We’re thrilled by the opportunity and humbled by the momentum and potential of our company and our industry. You may wonder why we are seeing such uptick and growth. There are a number of reasons:
Awareness — Word is getting out that people have alternatives to credit cards and traditional bank loans to get access to credit. As a result, lending marketplaces are becoming mainstream, much like ridesharing and other innovative online marketplaces are becoming more popular.
Quality — At Prosper we have a proprietary formula for assessing the risk of our borrowers with verification and validation of a host of criteria. Our first time borrowers fall within the prime or super-prime range, with an average FICO score between 700 and 710. This means investors can have confidence in the system, and everyone benefits. On average, our investors earned about 7 percent in 2014.
Convenience — In addition to low rates, one of the biggest benefits for borrowers is the ease and speed with which they can get loans online: 4-5 days rather than the 10 days or more it could take getting a traditional bank loan. Our customers also love the flexibility of online borrowing; we work around your schedule.
Partners — Prosper works with a number of partners, which include credit education sites, airlines and mortgage originators that help us get the word out about the benefits of working with Prosper. We continue to look for new companies that we can partner with to help our mutual customers.
Repeat visitors — After experiencing Prosper, many of our customers have started turning to us again for help through the various moments in their lives when they need financial support – medical bills, wedding expenses, travel costs or a second-car.
We’re building a strong community, with quality borrowers, confident investors and a growing numbers of partners. And we’re expanding our company and investing in people to meet the demand for services. Prosper Marketplace is up to 240 employees, with a thriving new office in Phoenix and new headquarters in San Francisco. And we’re going to keep growing — Prosper Marketplace is looking to add significantly more people to its team in the coming year.
But one thing that remains constant is our focus on the community we’ve built through our marketplace. So you’ll see new services and features coming in 2015 that are designed to enhance the borrowing and lending experiences even more – area like mobile access, and even faster verification and validation.
It’s been a fantastic journey so far, and we’re grateful to our customers, partners and investors that have joined us. We feel this is only the beginning, so stay tuned for more in 2015.
CEO, Prosper Marketplace
 Average FICO score for first-time borrowers who obtained loans in 2014
 Average investor return of about 7% is based on estimated return of loans originated in 2014
 Average time Prosper borrowers obtain loan based on loan originations in 2014
Just one month after announcing that we crossed $1 billion dollars in loans, I’m happy to report that we’ve hit another significant milestone. In April, a record $100 million in loans was originated through the platform. This is up 400% from one year ago and 30% month-over-month. More importantly, it is indicative of the incredible momentum we’re seeing for peer-to-peer lending as more people turn to Prosper to fund large purchases, start a small business or refinance high-interest debt.
Along with this rapid growth, Prosper has continued to invest in customer service. It is our intention to offer borrowers and lenders the absolute best customer service. To accomplish that goal, we have been hiring the right team members, streamlining operations and improving our technology infrastructure to continually deliver a faster and more transparent borrowing and investing experience. I look forward to sharing a number of enhancements to member communications, mobile functionality and member benefits along with profiles of several new members of the Prosper team in the coming months.
In April, Prosper also welcomed Macy Lee to the Executive team as the Chief Financial Officer. Macy has a proven track record of helping businesses grow from early stage to established industry leaders. Most recently, she was CFO of eBay Australia, the country’s largest eCommerce site. In that role, she was responsible for Controllership, FP&A, Strategy, Business Analytics, and Facilities, and was instrumental in defining and executing its business strategy. Prior to her position as CFO, Macy spent nearly 11 years in various finance and business roles at PayPal and eBay, as well as Oracle, Target, and Sichuan Provincial Economic & Trade Commission in China.
As we head towards early May, we are busy gearing up for the second annual LendIt 2014 conference, being held May 4-6th in San Francisco. Once again, Prosper is a leading sponsor and President Ron Suber will deliver the first day’s closing remarks, with a presentation titled: From Disruption to Revolution: The Tipping Point of Online Direct Consumer Lending. We will post a video of his speech following the conference. For more info on the conference you can visit www.lendit.co.
As always, thanks to everyone for their involvement on our platform – the amazing growth we have seen in the last 15 months would not have been possible without you. Please keep the feedback coming, and check back for more good news in the near future.
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.
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.