Prosper's People-to-People Lending Market Survey - Dec 2007

SAN FRANCISCO--(Business Wire)--Prosper (www.prosper.com), America's largest people-to-people
lending marketplace, today released the results of its December 2007
People-to-People Lending Market Survey.

In this month's market commentary, Prosper Chief Executive Officer
and co-founder, Chris Larsen, reviews 2007 and assesses what the
imminent recession and ongoing credit crunch means for
people-to-people lending.

In February, Prosper's People-to-People Lending Market Survey will
resume its normal release schedule, publishing on the second Tuesday
of every month. To register to automatically receive the survey, send
an email with "SUBSCRIBE" in the subject line to:
p2plendingmarketsurvey@prosper.com.

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December 2007 Prosper People-to-People Lending Market Survey

Membership and Loan Volume Statistics

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December December 2007 2006 Since
2007 2006 Full Year Full Year Inception
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New Members 31,620 18,251 400,361 137,545 538,128
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Funded Loans $6.2 $4.5 $80.9 $28.1 $109.1
million million million million million
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Average Loan Size $7,268 $4,638 $7,053 $4,765 $6,272
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Daily Average Number
of Borrower Listings 2,924 1,723 2,348 1,037 1,562
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Estimated Annual Return on Prosper Select Index

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December 2007
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Prosper Select Index 8.34%
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Prime Select Index 8.46%
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Near Prime Select Index 8.43%
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Sub Prime Select Index 5.59%
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Average Borrower Rates on Prosper Select Loans

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2007 2006
December November December Year-to- Year-to- Since
2007 2007 2006 Date Date Inception
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Prime Select
Loans 9.80% 10.22% 9.21% 9.98% 10.39% 10.08%
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Near Prime
Select Loans 16.07% 15.90% 16.50% 16.01% 16.41% 16.11%
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Sub Prime
Select Loans 32.99% 21.63% 23.86% 23.42% 25.01% 23.91%
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Mix of Funded Borrowers

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December December 2007 2006 Since
2007 2006 Year-to-Date Year-to-Date Inception
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Prime 43% 25% 32% 25% 30%
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Near Prime 52% 44% 57% 49% 55%
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Sub Prime 5% 31% 11% 26% 15%
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Noteworthy

The Official Prosper Blog (http://blog.prosper.com/) was honored
by the 2007 Performancing Readers Choice Award for "Best Use of a
Corporate Blog." (http://performancing.com/performancing-awards/
performancing-blog-awards-2007-winners). (Due to its length, this URL
may need to be copied/pasted into your Internet browser's address
field. Remove the extra space if one exists.)

Market Commentary by Chris Larsen, Chief Executive Officer and
Co-founder of Prosper

2007 proved to be a pivotal year for US markets as we abruptly
transitioned from optimism to fear of imminent recession. Who could
have predicted at the start of 2007 that the word "subprime" would be
voted the word of the year?

At Prosper, we also saw a dramatic switch in the prime versus
subprime market with subprime declining from over 25% in 2006 to
barely 5% currently. This change reflects both a changing external
market as well as a maturing of the Prosper marketplace.

Obviously the subprime meltdown exposed much more risk in the
subprime market in 2007 compared with a year earlier. Prosper's
performance data bore this out and has clearly moved people to safer
ground or to fund those borrowers with a clear social capital benefit.

The silver lining has been more opportunity in the prime and near
prime segments. As the credit crunch has unfolded, many traditional
lenders have dramatically tightened or eliminated credit to even their
best customers. For example, home equity, which until recently was
referred to as Americans' ATM, has been substantially limited by
falling real estate prices and mortgage industry bankruptcies. Credit
card offers have also been substantially reduced as defaults have
spiked nearly 20%. Thus, while the environment was tougher in 2007,
there is also much less competition for the best customers. This bodes
well for people-to-people lending which can take up the slack from the
seized-up capital markets.

The key focus for loan buyers will be choosing borrowers smartly
and pricing adequately for risk. Prosper's additions of
Prosper-specific market risk data and Portfolio Plans were both major
milestones in giving bidders the information they need to choose
wisely. For borrowers, pricing their listings adequately, telling and
explaining their story honestly, and involving friends and family to
bid as a measure of social capital are great ways to increase the
success of their auctions.

Definitions

2007 Full Year: January 1, 2007 through December 31, 2007.

2006 Full Year: January 1, 2006 through December 31, 2006.

Since Inception: November 1, 2005 through December 31, 2007.
Prosper's by invitation only "friends and family" launch began on
November 1, 2005 and Prosper launched to the general public on
February 13, 2006.

Prosper Select Index: The Prosper Select Index return is the
estimated average annual return on principal, based on actual
delinquency performance to date. The Prosper Select Index includes AA
- E credit grade loans for borrowers whose credit reports at the time
of application indicated zero current delinquencies, three or fewer
credit inquiries, and a debt-to-income ratio of 40 percent or less.
The annual return period reflects loans originated in the twelve month
period ending one month prior to the observation date of December 31,
2007. Prime Select includes AA and A credit grade loans (credit scores
of 720+). Near Prime Select includes B, C, D credit grade loans
(credit scores between 600 and 719). Sub Prime Select includes E
credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted
average borrower rates on Prosper Select Index loans with loan amounts
between $5,000 and $10,000. Rates shown are interest rates, not annual
percentage rates.

Mix of Funded Borrowers: Prime includes AA and A credit grade
loans (credit scores of 720+). Near Prime includes B, C, D credit
grade loans (credit scores between 600 and 719). Sub Prime includes E
and HR credit grade loans (credit scores below 600).

About Prosper

Prosper (www.prosper.com), America's largest people-to-people
lending marketplace, was created to make consumer lending more
financially and socially rewarding for everyone. Prosper's membership
consists of over 550,000 people from across the country. Since
launching in February 2006, over $110 million in loans have been
funded in the marketplace.

The way Prosper works is intuitive to people who have used eBay.
Instead of listing and bidding on items, people list and bid on loans
using Prosper's online auction platform. People who want to borrow on
Prosper create loan listings for up to $25,000 and set the maximum
rate they are willing to pay a lender. People who register as Prosper
lenders set the minimum interest rate they are willing to earn and bid
in increments of $50 to $25,000 on loan listings they select. In
addition to criteria commonly used by institutional lenders, such as
credit scores and histories, Prosper lenders can consider borrowers'
personal stories, endorsements from friends, and group affiliations.
Once the auction ends, Prosper takes the bids with the lowest rates
and combines them into one simple loan to the borrower. Prosper
handles all on-going loan administration tasks including loan
repayment and collections on behalf of the matched borrowers and
lenders.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN, and
John Witchel, technology entrepreneur. Backed by Accel Partners,
Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital,
and Omidyar Network, Prosper has raised approximately $40 million.
Prosper's marketplace platform is patent pending.

Prosper
Tiffany Fox, 415-593-5416
Prosper Communications Director
tiffany@prosper.com

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