I swear they are doing so many things wrong. The right move is to create a low cost way to attract small time lenders and fat cats. Why automatically exclude small time guys who would likely be a great way to attract interest and buzz around prosper. They shouldn't be excluding anyone who wants to lend. If casino's can have a 1 cent slot machine and make a profit on it, then prosper can find a way to make a profit off of someone who only has $25 dollars to lend.
I could be wrong, but aren't those SEC regulations? The premise being that people need to have money they can afford to lose prior to investing. Caping investment at 10% is also a good thing, especially since lenders won't own the loans.
Just look at Pensioner. Took out a home loan to invest in prosper. A 10% asset cap excluding home would have been great for him.
http://www.ericscc.com/lenders/pensioner
This is not a bad thing. Pensioner makes the case that there are enough people who will endanger their financial security when opportunities with unquantifiable risk appears on the horizon.
With the new wording in the S1, where Prosper owns the notes and note holders' position in a bankruptcy is undefined, do you really want to run the risk of having a substantial investment (in my case the words should read "any investment") where I am not only subject to the risks imposed by the investment itself, but also by the risk imposed by the financial viability of the intermediary? It would be as if my investments in mutual funds are also subject to the chances that my stockbroker stays afloat.
This is a horrific scenario for any investor. It is 180 degrees opposite of the initial promise of Prosper where I owned something. Now, if Prosper 2.0 (or .3?) goes belly up then I'm SOL and we all know that start-ups are inherently very, very risky. You'd have to be nuts to put a penny into Prosper if they cannot fence your investment from their viability. You may as well buy stock in the company.