TECHNOLOGY AND INNOVATION:
POWERING THE FUTURE OF
FINANCIAL OPPORTUNITY
Crowdfunding
►

(Crowd Financing, Equity Crowdfunding, Crowd Sourced Fundraising)

NOT NEW
►

17th century to fund books

...
Crowdfunding Models
FUNDS AS DONATION OR SECURING INVESTMENT?
1. Debt Based
Interest payment on top of capital payment - a...
Different Approaches

All or Nothing

Keep It All

Bounty

Money only collected if

Funds collected are kept

Give the fun...
Benefits & Challenges
BENEFITS

CHALLENGES

►

Financial gain

►

Little or no “IP” protection

►

Raise profile and reput...
The New Shared Economy
Phases of The Internet Evolution

PROPRIETARY & CONFIDENTIAL

.

© 2013

6
The Industry Last Year

Borrower

Lender

• Incentives provided to increase Lender activity
• Large referral fees to invit...
The Industry Now

Lender

• Maintain quality while growing 10%+ per month
• Reduce borrower acquisition costs
• Increase b...
Optimism For The Future

Lender

Borrower

Now• Credit card/consumer finance
• Small business
• Student loans

PROPRIETARY...
Conditions for Peer-to-Peer Growth

4

3
2
1
High yield
fixed income
trading at
tight levels

Healthy US
consumer buoyed
b...
Where Does The Industry Go From Here… Possibilities
1.

A true liquid secondary market

2.

Risk free rate of return rises...
This Is Just The Beginning

PROPRIETARY & CONFIDENTIAL

.

© 2013

12
Thank you

PROPRIETARY & CONFIDENTIAL

.

© 2013

13
Disclosures
Neither Prosper Funding LLC nor Prosper Marketplace, Inc. are registered as an investment adviser with any fed...
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Prosper Stanford Presentation

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Prosper Stanford Presentation

  1. 1. TECHNOLOGY AND INNOVATION: POWERING THE FUTURE OF FINANCIAL OPPORTUNITY
  2. 2. Crowdfunding ► (Crowd Financing, Equity Crowdfunding, Crowd Sourced Fundraising) NOT NEW ► 17th century to fund books ► 1884 to fund Statue of Liberty pedestal ► A collective effort to network, pool money via the internet ► Small contributions from many parties ► Activities include: ► Disaster relief/charity ► Support of artists, movies, video games, entertainment ► Political campaigns ► Start up/acceleration company funding ► Civic projects/community oriented 10-25% Z COMPLETION A IDEA CROWDFUNDING IS HERE. PROPRIETARY & CONFIDENTIAL . © 2013 2
  3. 3. Crowdfunding Models FUNDS AS DONATION OR SECURING INVESTMENT? 1. Debt Based Interest payment on top of capital payment - also known as peer to peer finance 2. Equity Based Fund in exchange for equity hoping value goes up or dividend 3. Profit sharing % of gains distributed to investors 4. Gifts, virtual thanks, mention in the credits Reward those who provide support early on 5. Hybrid model Combination of the above PROPRIETARY & CONFIDENTIAL . © 2013 3
  4. 4. Different Approaches All or Nothing Keep It All Bounty Money only collected if Funds collected are kept Give the funds collected target dollar amount met whether target amount is upon project reached or not completed/success PROPRIETARY & CONFIDENTIAL . © 2013 4
  5. 5. Benefits & Challenges BENEFITS CHALLENGES ► Financial gain ► Little or no “IP” protection ► Raise profile and reputation ► Once posted – easy to copy ► Marketing, awareness, branding ► Costs (Paypal, site and rewards for supporters) ► Feedback ► Failure ► Replaces email marketing ► Fraud ► Breaking local boundaries – opens the world ► Donor exhaustion ► Lessens the battle for initial stage ► Scam, abuse, regulatory capital sourcing ► Realistic Easily and safely expands number ► No buzz/promotion ► Articulate the story and the edge ► Need a social network ► Vet the idea before funding request ► of supporters ► More diversified investor base PROPRIETARY & CONFIDENTIAL . © 2013 5
  6. 6. The New Shared Economy Phases of The Internet Evolution PROPRIETARY & CONFIDENTIAL . © 2013 6
  7. 7. The Industry Last Year Borrower Lender • Incentives provided to increase Lender activity • Large referral fees to invite friends to lend • 1000+ Loans available PROPRIETARY & CONFIDENTIAL . © 2013 • Lengthy Funding Times for Borrowers • Frequent delays in month end statements for Lenders 7
  8. 8. The Industry Now Lender • Maintain quality while growing 10%+ per month • Reduce borrower acquisition costs • Increase borrower activation rates PROPRIETARY & CONFIDENTIAL . © 2013 Borrower • Find additional methods to attract borrowers • Continue to improve credit, pricing and risk models • P2P education... tell the story 8
  9. 9. Optimism For The Future Lender Borrower Now• Credit card/consumer finance • Small business • Student loans PROPRIETARY & CONFIDENTIAL Coming now or very soon• Real estate (commercial or residential) • Raw Land • Furniture . © 2013 • Elective surgery • Auto loans • Receivables • Litigation finance 9
  10. 10. Conditions for Peer-to-Peer Growth 4 3 2 1 High yield fixed income trading at tight levels Healthy US consumer buoyed by the rise in home values and the bull market in equities Banks are driving consumers to seek alternatives Continued low interest rate environment is creating a demand for yield from investors across the spectrum Peer-to-Peer finance is web based and easy to use PROPRIETARY & CONFIDENTIAL . © 2013 10
  11. 11. Where Does The Industry Go From Here… Possibilities 1. A true liquid secondary market 2. Risk free rate of return rises as fed funds rate rises making P2P returns less compelling 3. P2P platforms add many more higher risk, higher interest rate borrowers 4. New forms of data and analysis methods become available making underwriting, risk, and pricing even better 5. Loans posting in real-time throughout the day – Not set intervals 6. An insurance option where returns are lower but a minimum interest rate/return guarantee 7. Global multi asset class platforms emerge 8. Purchased by Marketplace business, social networks, or other technology companies… IPO? 9. P2P companies purchase their own bank charters 10. Credit card companies create a lower, fixed rate, amortized refinance solution for borrowers 11. Loans available in all states 12. Loan securitization PROPRIETARY & CONFIDENTIAL . © 2013 11
  12. 12. This Is Just The Beginning PROPRIETARY & CONFIDENTIAL . © 2013 12
  13. 13. Thank you PROPRIETARY & CONFIDENTIAL . © 2013 13
  14. 14. Disclosures Neither Prosper Funding LLC nor Prosper Marketplace, Inc. are registered as an investment adviser with any federal or state regulatory agency. The information contained in this presentation is for informational purposes, and should not be construed as individually tailored investment advice or as a recommendation with respect to any security or investment approach. This presentation has been prepared without regard to the circumstances and objectives of the conference’s participants and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any participant. Each participant should consider the appropriateness of any investment decision having regard to his or her own circumstances, the full range of information available and appropriate professional advice. Prosper Funding LLC and Prosper Marketplace, Inc. recommend that each participant seek independent investment and financial advice concerning any services or investments discussed in this presentation. Notes are offered pursuant to the Prospectus which accompanies this presentation and which is also available at www.prosper.com/prospectus. Persons considering investing in Notes should review the Prospectus in its entirety. PROPRIETARY & CONFIDENTIAL . © 2013 14

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