Social lending: is it really new? Is it going to be big? Jean-Christophe Capelli March 29, 2008

Social media is changing the financial industry Social media is here to last fy 2007 rev : 550 M$ 115 M visitors/month Social media: for everybody, for any purpose Social media impact for the financial industry New ways of propagation information (blogs, Wesabe or Mint websites) -> new marketing required New business models: social lending, social money, P2PVenture,… 2007 rev : 150 M$ 50 M visitors/month

Social media is here to last

Social media: for everybody, for any purpose

Social media impact for the financial industry

New ways of propagation information (blogs, Wesabe or Mint websites) -> new marketing required

New business models: social lending, social money, P2PVenture,…

P2PLending is the oldest form of credit ROSCA (Rotating Savings and Credit Association) Ekub (Ethiopia), Lun-Hui (China), Consorcio (Brazil), Tontine (France),… Cooperative banking Caisse d’Epargne (France): founded 1818 Caisse Desjardins (Canada): founded 1900 Credit Unions Microcredit Grameen bank: founded 1976-1883 Kiva: founded Feb-Oct 2005

ROSCA (Rotating Savings and Credit Association)

Ekub (Ethiopia), Lun-Hui (China), Consorcio (Brazil), Tontine (France),…

Cooperative banking

Caisse d’Epargne (France): founded 1818

Caisse Desjardins (Canada): founded 1900

Credit Unions

Microcredit

Grameen bank: founded 1976-1883

Kiva: founded Feb-Oct 2005

P2PLending: cut out the middleman How to mitigate risk? Bank takes risk Bank Bank Borrower Lender Personal relationship Friends & family loan Business Model Lender Online P2PLending Source > Deutsche Bank Research August 2006 Peer pressure and/or diversification + social media features(optional) Borrower Lender Borrower Borrower Borrower

From P2PLending to social lending No marketplace, no social media features Loans between family and friends Valuable services helping folks "formalize" what are sometimes very informal loan agreements CircleLending (now Virgin Money ). Founded 2002 LoanBack A marketplace with no social media features Zopa GB (March 2005) A marketplace WITH social media features Prosper US (Feb 2006) Zopa US

No marketplace, no social media features

Loans between family and friends

Valuable services helping folks "formalize" what are sometimes very informal loan agreements

CircleLending (now Virgin Money ). Founded 2002

LoanBack

A marketplace with no social media features

Zopa GB (March 2005)

A marketplace WITH social media features

Prosper US (Feb 2006)

Zopa US

Social lending timeline Already a global industry Some local barriers to entry (regulation, positive credit scoring)

Current figures Loans originated by: Prosper: 120 millions USD (within 2 years) All Prosper stats are public http://www.prosper.com/lend/performance.aspx Zopa GB: 40 millions USD (within 3 years) Zopa GB data were not disclosed until last month How to compare? French loan market (mortgages excluded): 75 billions euros originated each year… Who’s got US figures? More than 5 times bigger?

Loans originated by:

Prosper: 120 millions USD (within 2 years)

All Prosper stats are public

http://www.prosper.com/lend/performance.aspx

Zopa GB: 40 millions USD (within 3 years)

Zopa GB data were not disclosed until last month

How to compare?

French loan market (mortgages excluded): 75 billions euros originated each year…

Who’s got US figures? More than 5 times bigger?

US Forecast (Celent Study) US P2P loans market : 2007 : 600 millions USD 2010 : 5,8 billions USD

Global forecast (Gartner study) Gartner predicts that “by 2010, social-banking platforms will have captured 10 per cent of the available worldwide market for retail lending and financial planning”.

Gartner predicts that “by 2010, social-banking platforms will have captured 10 per cent of the available worldwide market for retail lending and financial planning”.

Personal loans between family and friends who do work French launch: May 2008 Contact: Jean-Christophe Capelli, CEO Blog: http://capelli.typepad.fr +33 (0)6 14 73 23 46