Print

[Cushie]

SAN FRANCISCO--(BUSINESS WIRE)--Prosper, the largest peer-to-peer lending marketplace in the U.S. with over $180 million in loans and 870,000 members, today announced that Nigel W. Morris, Co-Founder of Capital One, has joined its Board of Directors and his venture capital firm, QED Investors, has invested in the company.

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20091110006686&newsLang=en

[TotoMMB]

Hmm. Capital One, champion of the sub-prime credit community. Guess this is par for the course.

[112233]

somebody call a plumber! this toilet won't stop flushing!

[Fred93]

Nigel W. Morris, Co-Founder of Capital One, has joined its Board of Directors and his venture capital firm, QED Investors, has invested in the company.

This is good news.  It means that Prosper isn't going bankrupt any time soon.  (So those of you who keep speculating about that can chill out.)   (see next message)

Fred93's question: Does Nigel read my blog?

[Fred93]

Oops.  I just read the form 8K that Prosper filed with the SEC on this event.  It turns out that our friend Nigel only invested $1 Million.  That's not enough to keep them running long term.  This is what is often called a "bridge loan".

Is this for show, or to get Nigel on the board, or just to keep them running for a short time 'till they get more money, or what? 

http://www.sec.gov/Archives/edgar/data/1416265/000141626509000239/p8k11092009.htm

Item 1.01. Entry into a Material Definitive Agreement.
On November 10, 2009, Prosper Marketplace, Inc. (“Prosper”) and QED Fund I, L.P., a Delaware limited partnership (“QED”), entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”), pursuant to which, Prosper sold to QED a Convertible Promissory Note (the “Note”), dated as of November 10, 2009.  The Note is in the principal amount of $1,000,000.  Interest on the Note accrues at a per annum rate of 15.0%.  All principal and accrued interest under the Note are due in a single payment on November 10, 2011 (the “Maturity Date”).  On the Maturity Date and for 90 days after, QED may elect to convert all principal and accrued interest under the Note into shares of Prosper’s preferred stock.  If QED elects to convert the Note, and Prosper has consummated a preferred stock financing for an aggregate purchase price of $5,000,000 or more between November 10, 2009 and the date of QED’s election, the Note will convert into shares of the preferred stock sold pursuant to such financing at the per share purchase price for such financing.  If QED elects to convert the Note but Prosper has not consummated any such preferred stock financing, the Note will convert into shares of Prosper’s Series C Preferred Stock at the per share purchase price at which such shares were sold for Prosper’s Series C financing, which was consummated in June 2007.  Prosper’s obligations under the Note are unsecured. Within 30 days of the closing of the transactions contemplated by the Purchase Agreement, QED may elect to purchase an additional convertible promissory note from Prosper in the principal amount of $1,000,000, which note shall be convertible into shares of Prosper’s preferred stock on the same terms as the Note.
In connection with the Purchase Agreement, Prosper also issued to QED a fully vested warrant to purchase 164,178 shares of Prosper’s Common Stock at an exercise price of $0.56 per share (the “Warrant”).

[Urbi_et_Orbi]

Prosper borrowing money at 15%? 

 

[Beerbud1]

Nominate for Lobby

[dlv1945]

How long does it take them to burn a million these days?

[112233]

Maybe they do not intend to pay this loan back, thus who cares about the interest rate.

.. you know, like many prosper borrowers

[Capital_Finance_Group]

Prosper borrowing money at 15%? 

 

They should have gone to Lending Club. 

[Cushie]

Article that focuses more on the loan than the Prosper PR puff piece...
http://www.techcrunch.com/2009/11/10/old-line-banker-puts-1-million-into-p2p-lender-prosper/

Prosper.com, a popular peer-to-peer lending marketplace in the U.S., has received a $1 million infusion from Nigel Morris, co-founder of Capital One, via his venture capital firm QED Investors. This brings the company’s total funding to over $41 million from Accel Partners, DAG Ventures, Fidelity Ventures and Benchmark Capital, among other investors.

(more in article)

[TotoMMB]

Article that focuses more on the loan than the Prosper PR puff piece...
http://www.techcrunch.com/2009/11/10/old-line-banker-puts-1-million-into-p2p-lender-prosper/

(more in article)

Not a puff piece, but a poorly written one.

Prosper pioneered the idea of concept of people-to-people lending...

Prosper became the first and thus only Internet auction-based P2P loans platform...

Both lines seem choppy. The first one appears they wanted to spruce up "idea" with "concept" and forgot to clean up. The second example...I'm not sure if they were going for the "first" - before LC - or if they are the "only" platform to be registered in all those states, in which case they could have only used "only". It would imply "firstness".

[onthefence]

Nominate for Lobby

2nd.

[onthefence]

And so it begins, the taking out of loans by Prosper when the only significant asset that can be taken are the loans obtained by lenders "investors".

http://www.prosper.com/invest/performance.aspx?af=0&esba=63&gm=0&gr=0%2c1%2c2%2c3%2c4%2c5&hw=0&iba=255&ibid=0&iwatch=0&lc=0%2c1%2c2%2c3%2c4%2c5%2c6%2c7&lq=&maxAmt=100000&maxDTI=1000000&maxFund=1&maxGrpTLC=1000000&minA=0&minAA=0&minAmt=0&minB=0&minC=0&minD=0&minDTI=0&minE=0&minFund=0&minGrpTLC=0&minHR=0&minNC=0&occ=&od=11%2f10%2f2009&oer=11%2f10%2f2009&osr=07%2f01%2f2009&pbt=0&plcsd=&plp=0&pmr=0&sf=10&sh=0&sn=&tg=0

$4,919,588 in loans have been generated since July 2009 under the new lender investor agreement.  If/when Prosper goes south, I don't see how Nigel Morris has any less of a claim to these funds than Prosper's lenders investors. 

If this funding approach continues, I see this as a very grave risk to lenders investors.  Prosper sees no problem putting lender's investments at risk to extend their potential survival time.  Just know that when push comes to shove, Prosper will do this.

[kenL]

Yeah! another month to draw my funds out!

Does this give prosper the funds to operate until February?

Prosper should try borrowing from itself