fdic advisory committee on economic inclusion march 28, 2007
TRANSCRIPT
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FDICAdvisory Committee on Economic InclusionMarch 28, 2007
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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
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 Market
Books
Stocks
Loans
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Second Wave (Web 2.0)
What is New? Value creation: communication,
community, commerce Source of value is people Company is servant infrastructure
What is New? Value creation: communication,
community, commerce Source of value is people Company is servant infrastructure
Web 1.0 Web 2.0 Market
Videos
Guides
Loans
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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
Open access to Consumer Credit Market Anyone with as little as $50 can lend Community decides where and why to grant credit
Leverages power of community Groups, friends and endorsements provide
Vouching benefit Shame factor
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Backing
Series A & Series B $20 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
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Prosper’s Early Results
Users: 235,000
Loans by $: $47,000,000
Borrower Loans: 8,800
Promissory Notes: 450,000
Payments to Lenders: 1,200,000
Discussion Posts: 260,000
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High Growth, Good Credit Quality
-2,0004,0006,0008,00010,00012,00014,00016,000Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06MonthMonthly Registrations -10,00020,00030,00040,00050,00060,00070,00080,000Cumulative RegistrationsLendersAll RolesCummulative
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Mar
-06
Apr-0
6
May
-06
Jun-
06
Jul-0
6
Aug-0
6
Sep-0
6
Oct-06
Nov-06
Dec-06
Jan-
07
Closing Month
Mo
nth
ly F
un
ded
Lo
ans
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
Cu
mu
lati
ve F
un
ded
Lo
ans
Sub-Prime Near-Prime Prime Cumulative
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Loan Listings
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Listing Summary
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Credit & Employment Data
AA A B C D E HR
+760759-720
719-680
679-640
639-600
599-560559-520
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Description
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Group Information
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Endorsements
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Questions & Answers
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Bid History
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Lender Bidding
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Estimated ROI
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Diversified Lender Portfolio
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Transaction fees
BORROWER
Closing fees
1% AA - D2% E - HRMin. $25
LENDER
Servicing fees
0.5% AA - A1% B - HRPer annum
BORROWER
Failed payment fee
$15First incident per billingperiod
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What We Do/ What Community Does
What we do Perform ID, security, BSA, and bank account validation Handle loan disclosures and privacy protection Administer loan servicing and collections Set Marketplace standards, rules, and etiquette
What community does Makes credit and pricing decisions Leverages reputation through groups and endorsements Introduces and helps new members Monitors and reports unacceptable behavior
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Per Loan Economics
Prime Near-Prime Sub-Prime
Average Loan $8,000 $7,500 $3,100
Total Revenue $195 $245 $150
Origination Expense ($13) ($18) ($42)
Servicing Expense ($12) ($17) ($23)
Gross Margin $170 $210 $85
Marketing Expense ($100) ($90) ($65)
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Returns by Grade
AA A B C D E HRNet Interest 10.35% 12.2% 14.3% 16.4% 19.9% 22.0% 20.%
NetDefaults -0.7% -1.4% -3.4% -4.0% -7.9% -18.7% -27.8%
NetReturn 9.6% 10.8% 10.9% 12.4% 11.9% 3.3% -7.0%
PrimeNear
PrimeSub
Prime Total
Net Interest 11.4% 16.9% 21.3% 16.5%
NetDefaults -1.1% -5.1% -24.0% -8.0%
NetReturn 10.3% 11.8% -2.7% 8.5%
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Borrowing Groups
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Borrowing Groups
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Group Leader Rewards
Match Rewards (Paid by Prosper)
0.5% AA – D0% E – HRPercentage of loan amount
Payment Rewards (Optional, paid by members)
1% AA – A2% B – D4% E – HR
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3rd Party Applications
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Research Papers
Student Lending Market Opportunity Assessment
Prosper Regression Project - Fundability Study
Analysis of Interest Rates for Lenders on Prosper.com
Case Study – Dec. 2006
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Prosper in the News
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Prosper in the Blogs
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Prosper Community Meet & Greets
New York (cellardoor) NorCal (BigGulp) SoCal (DebInVenice) Atlanta (PolarC)