Prosper.com Microfinance - SVMN.net mtg 2007-09-10

Prosper Marketplace

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

Existing Consumer Credit Markets Institutional Markets - Wall Street Community Lending - Early US S & L’s - Informal Asian Lending
Good : borrower shame/loyalty
Good : low marketing costs
Bad : risky - no diversification
Good : great diversification
Bad: no borrower loyalty
Bad : high marketing costs
= Borrowers = Lenders

Prosper combines best of both markets Group Leader marketing = Lenders = Borrowers = Group Leader Lender diversification Borrower reputation Friends, Endorsements reputation/marketing

$900 billion US credit card market
Announced Japan JV - $200 billion market
Market Size – Unsecured consumer credit Source: SMR Research 2005 and Financial Services Agency of Japan 2006

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

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

Listings

Listing Summary

Group Information

Endorsements from Friends

Bid History

Deep Operational Integration Banking and Finance Collection Agencies Credit Reporting Agencies Anti-Crime Scheduled: Fall ‘07 Scheduled: June ‘07 Scheduled: Fall ‘07

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
Offline Online Product Books Stocks Loans

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
Web 1.0 Web 2.0 Product Video Guides Loans

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

What if there were no people?

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

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Prosper.com Microfinance - SVMN.net mtg 2007-09-10

by Dave McClure

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