SAN FRANCISCO--(Business Wire)--
Prosper, America's largest people-to-people lending marketplace,
today released results for June 2008. In this month's commentary,
Prosper CEO and Co-Founder, Chris Larsen, highlights recent studies
related to returns and bidding behavior in the Prosper marketplace.
June 2008 Prosper People-to-People Lending Market Survey
Prosper's People-to-People Lending Market Survey results are
released 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.
Market Commentary By Prosper Co-founder and Chief Executive
Officer, Chris Larsen
In June, two very interesting independent academic studies were
released. The first study by Economists Ginger Zhe Jin and Seth
Freedman of the University of Maryland looks at Prosper's market since
inception to determine average returns and other interesting
conclusions about the market.
Another study led by Paul Dholakia at Rice University finds that
decisions made by Prosper lenders are much less likely to be
influenced by race or gender and "strong evidence for the
democratization of lending practices in P2P loan auctions." The study
also cites that bidders on Prosper:
-0-
*T
(...) seem more rational (bid according to what is best for
them financially) and less influenced by stereotypes (bid
according to old notions and stigmas). This outcome is
substantially different from the documented discriminatory
practices of financial institutions (e.g., Ladd 1998;
Munnell et al. 1996; Blanchflower, Levine, and Zimmerman
2003) (...).(1)
*T
As we have previously stated, one of our primary objectives in
making Prosper market data fully transparent and freely available via
an API is to allow and encourage anyone to study the Prosper market
and consumer credit markets in general. We deeply appreciate the level
of diligence and analysis so many have contributed using Prosper's
marketplace data. We are also very encouraged that an increasing
number of academics, economists and professional credit analysts have
taken the time to conduct deep studies of the market and share their
conclusions publicly.
-0-
*T
Membership and Loan Volume Statistics
-----------------------------------------------------
June June Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
----------------------------------------------------------------------
New Members 28,401 30,985 216,036 202,459 754,164
----------------------------------------------------------------------
Funded Loans ($) $8.3 $7.0 $46.8 $43.4 $155.8
million million million million million
----------------------------------------------------------------------
Funded Loans
(Units) 1,436 950 7,418 6,197 24,803
----------------------------------------------------------------------
Average Loan
Size $5,755 $7,389 $6,309 $7,004 $6,282
----------------------------------------------------------------------
Daily Average
Number of
Borrower
Listings 2,510 2,385 2,454 2,039 1,729
----------------------------------------------------------------------
*T
-0-
*T
Mix of Funded Borrowers
-----------------------------------------------------------
June June Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
----------------------------------------------------------------------
Prime 43% 28% 42% 29% 34%
----------------------------------------------------------------------
Near Prime 52% 61% 53% 56% 54%
----------------------------------------------------------------------
Sub Prime 5% 10% 5% 15% 12%
----------------------------------------------------------------------
*T
-0-
*T
Estimated Annual Return on Prosper Select Index
--------------------------
June 2008
----------------------------------------------------------
Prosper Select Index 7.22%
----------------------------------------------------------
Prime Select Index 8.04%
----------------------------------------------------------
Near Prime Select Index 6.38%
----------------------------------------------------------
Sub Prime Select Index 9.18%
----------------------------------------------------------
*T
-0-
*T
Average Borrower Rates on Prosper Select Loans
---------------------------------------------------------
June May June Year-to-Date Year-to-Date Since
2008 2008 2007 2008 2007 Inception
----------------------------------------------------------------------
Prime Select
Loans 9.38% 9.55% 10.09% 9.78% 9.96% 9.95%
----------------------------------------------------------------------
Near Prime
Select
Loans 16.53% 16.17% 17.17% 16.09% 15.47% 16.10%
----------------------------------------------------------------------
Sub Prime
Select
Loans 35% 22.37% 23.15% 27.36% 23.29% 24.21%
----------------------------------------------------------------------
*T
Definitions
Since Inception: November 1, 2005 through June 30, 2008. 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.
2008 Year-to-Date: January 1, 2008 through June 30, 2008.
2007 Year-to-Date: January 1, 2007 through June 30, 2007.
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 June 30,
2008. 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 all AA and A credit grade
loans (credit scores of 720+). Near Prime includes all B, C, D credit
grade loans (credit scores between 600 and 719). Sub Prime includes
all E and HR credit grade loans (credit scores below 600).
About Prosper
Prosper, 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 750,000
people from across the country. Since launching in February 2006, over
$159 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 data 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.
(1) Rick L. Andrews, Utpal (Paul) Dholakia, Michal Herzenstein,
Evgeny Lyandres (2008), "The Democratization of Personal Consumer
Loans? Determinants of Success in Online Peer-to-Peer Loan Auctions,"
31
Prosper Communications Director
Tiffany Fox, 415-593-5416
tiffany@prosper.com
Copyright Business Wire 2008
