On the eve of LendIt last year Prosper announced their largest funding round ever – a $70 million round that valued the company at $600 million. This year, with LendIt just days away, they have upped the ante with the announcement last night of a $165 million round at a whopping $1.865 billion valuation.
Prosper has welcomed many new equity investors into this round. Interestingly, there are quite a few banking names on this list: Credit Suisse NEXT Investors, part of Credit Suisse Asset Management, J.P. Morgan Asset Management, SunTrust Banks and USAA. There were several others in the round but these were the major banking names.
I reached out to Prosper CEO, Aaron Vermut, to discuss this new round and what it means for Prosper and the industry. When I mentioned all the banking names in this round he acknowledged that banks in general are very much interested in the space right now. And the asset management arms of large investment banks like Credit Suisse and J.P. Morgan are also looking to deploy money on the Prosper platform for their clients.
Focused on Growth
When I asked Aaron what he was going to use this money for he said that Prosper is focused on growth and “professionalizing the business”. By this he means improving some of the areas where Prosper is not where they want to be today. This includes improving the investor experience for retail investors, something that has been on their to-do list for a while, but it looks like a new investor platform is finally going to happen this year.
Prosper will be hiring more engineers, more bizdev people, offline marketers and investor services people. In fact there will be hiring in most areas of their business as they expect to grow from 310 people today to over 600 people a year from now.
While Prosper did have two profitable quarters last year, Aaron said he does not expect Prosper to turn a profit this year. They are investing in their business and profitability is not a near-term priority. He doesn’t expect a big loss either but Prosper is going to be “investing in their business with intent.”
No IPO This Year
I asked the obvious question that I am sure Aaron gets sick of answering. After the successful Lending Club IPO everyone wants to know when Prosper is planning to go public. While he has often said that there are no immediate plans to explore that possibility Aaron went a little further in our conversation and said there are no plans this year to do an IPO. He said they have a lot of improvements they want to make before exploring that possibility.
A Record First Quarter
Back in January, Prosper stopped updating their loan volume on a daily basis. So, we had no idea how the first quarter went until now. Not surprisingly, it was a very strong quarter with $595 million of new loans originated. This was up from $540 million in Q4 last year and $195 million from the year ago quarter.
This growth and the new funding round certainly solidifies Prosper’s position and will help them compete with Lending Club as well as the newer entrants in the space.
The industry is clearly maturing. And maybe on the eve of LendIt next year we will hear another big announcement from Prosper…an IPO possibly? It will be a very interesting next 12 months that’s for sure.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.