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[onthefence]

I believe someone mentioned that Prosper will be attempting an additional round on funding this Monday 7/20.  I can't tell Prosper how important this is from a lender perspective.  Now that Prosper clearly owns the loans, the risk of Prosper folding or going bankrupt is too great a risk to be incorporated into the interest rates for borrowers loans.

Ideally Prosper should obtain at least 3-4 years of operational expenses plus money for marketing.  Why?  Well if Prosper does not have enough money to cover the 3 year duration of a loan, then the risk of Prosper folding or going bankrupt has to be factored into the risk & interest rate.  That just won't fly.  No intelligent person would take that bet.  Having those funds in hand however makes lending a realistic option.

And what about adding marketing expenses?  Well when Prosper left off they were only about 1/4th to 1/3rd of the way towards covering their operational costs, and the number was not climbing.  Prosper seemed stuck.  Unless Prosper finds some way to bring in 3-4 times the number of loans they were originally, they will never be profitable (barring foolish maneuvers like raising their cut & fees so high that borrowers are not interested in the rates being offered).

A lot is riding on this round of funding & I wish you guys the best of luck.


Side note:
And while you are at it, go find some fresh new creative marketing talent who can be honest & forthright.  Because whatever has been done to date hasn't been able to generate the volume you need to survive.  And the Pre-SEC marketing spin has left bad taste in everyone's mouth and has led to a lot of bad word-of-mouth.  And I'm not just talking about .Org.  Once all of the lender's portfolios average age approached a year, the smoke & mirrors dropped away & people got pissed.  You can only fool most of the people for up to a year.  After that, any deceit or misrepresentation bites you squarely in the rear-end.


Modification: Fixed grammatical error.

[Mark12547]

Nominated for the lobby.

[112233]

2nd

[Faithful_Steward1]

How did this capital raise turn out?

[mothandrust]

A lot is riding on this round of funding & I wish you guys the best of luck.

Me too.  I hope that they get a lot of VC funding and that new lenders bid the farm on all the new loans so Prosper originates a lot of loans with a 3% fee.

The more successful the grand re-opening is, the more likely they will settle or be able to pay a judgement in the class action lawsuit.

[Investar]

How did this capital raise turn out?

I have kindly asked Prosper to shed some light on this, a most crucial element for all concerned, especially potential lenders. I've also been checking their SEC file in hopes a document advising their regulator will appear. I would expect Prosper's reply (if any) later this week. They may prefer to say nothing until the process is concluded.

[Investar]

I believe someone mentioned that Prosper will be attempting an additional round on funding this Monday 7/20. I can't tell Prosper how important this is from a lender perspective.  Now that Prosper clearly owns the loans, the risk of Prosper folding or going bankrupt is too great a risk to be incorporated into the interest rates for borrowers loans.

I have come to the opinion we will not hear about overtures Prosper is making to their friends in the venture capital community for some months. I have not received a reply to my inquiry and do not really expect one. Given the market in which they are forced rattle their little tin cup, patience may be their virtue. "At March 31, 2009, we had approximately $7.4 million in cash and cash equivalents, which we believe will be sufficient to fund our operations through 2009." (SEC S-1 AMENDMENT 6 final version, Pg 98, "Liquidity and Capital Resources")

Given the lackluster embrace among the 50 States to date (only 16 have approved), this pioneering P2P business model remains seriously impaired. Prosper's position in the tin cup line-up is further impaired, given that investment capital of all sorts dried up in the wake of burnt fingers and singed eyebrows resulting from explosion in the risky investment free-for-all we've just come through. Those who follow "junk bonds" know the high risk/high yield market began demanding exorbitant premiums to refinance existing debt coming due. There was virtually no market in which to float new debt, especially for the small, untested entrepreneur. That boa constrictor is just now beginning to relax.

The longer Prosper can hold out, the better the outlook for successful recapitalization becomes — all provided enough states provide enough lenders. Clearly, there's no problem attracting borrowers. This period in Prosper's life may serve them well. It is the best opportunity for an evolution of corporate culture we've seen. The grueling climb back to "Prosper"ity now taking place may bring a heartfelt realization that, despite they make their money on the borrowers, it is the lenders who are their most valuable customers. I don't think that has happened yet.

Just how small is Prosper? "As of March 31, 2009, we employed thirty-eight full-time employees (S-1/A, Pg 74, "Employees"). Of these employees:
• 13 were in network and engineering;
•   8 were in customer services, which includes the employees who conduct our collection activities;
•   8 were in legal and finance;
•   5 were in marketing; and
•   4 were in general and administration."
So it's a tight-knit community who is working thru one of the most trying times in any organization. I wish them each personally, all the best.

[ira01]

I wish them each personally, all the best.

I sincerely hope, from the bottom of my heart, that Prosper gets exactly what it deserves.   

[Gogmagog]

I admit that I stopped following Prosper related developments in detail when the quiet period started.  It will likely take a while to rebuild the Lender base, probably well over a year.  Unless they get some of the Institutional money they talked about.  Has there been any significant developments here?  When they came out of the quiet period briefly, I remember seeing mention of it.

[Urbi_et_Orbi]

So, is Prosper going to show the loans it owns as company assets and use the loans as collateral for getting a bank loan?  

[mothandrust]

I wish them each personally, all the best.

Me too.  The more money they have sloshing around, the more able they'll be to pay off the class action litigants.

[onthefence]

So is Prosper going to be issuing quarterly reports or are lenders going to be walking into this blind?

[Investar]

A little scuttlebutt here....
Some of Prosper's intimate financial undergarments just went under wraps.

On August 6, 2009, Prosper received a CT-ORDER (Confidential treatment order) from the SEC. Per the SEC's announcement, "Prosper Marketplace, Inc. submitted an application under Rule 406 requesting confidential treatment for information it excluded from the Exhibits to a Form S-1 registration statement ... as amended." The SEC agreed "that this information qualifies as confidential commercial or financial information under the Freedom of Information Act." Items Prosper submitted as Exhibit 10.3 and 10.4 to their filing(s) are being locked away until April 14, 2012.

So what's in 'em? As a matter of form:
• S1-10.3 usually details debt obligations and contractual indenture of the filer and it may (or may not) include an "ASSUMPTION AGREEMENT" or the likes.
• S1-10.4 generally details stock offers/issuance of the filer and it could include a "PURCHASE/PLACEMENT AGREEMENT" or like kind of encumbrance.

And what does this mean? Hella-fino, maybe nothing. Or maybe it's stuff a potential venture capitalist would like to review. Or maybe it's stuff the Class Action litigants would love to get their hands on. In the first instance I'd guess the other party will become privy in private. In the second instance, I guess not, huh. Anywho, that's all I found (so far) while hunting clues related to this thread. Guess I'll wait for Prosper to talk now.

[mothandrust]

On August 6, 2009, Prosper received a CT-ORDER (Confidential treatment order) from the SEC. Per the SEC's announcement, "Prosper Marketplace, Inc. submitted an application under Rule 406 requesting confidential treatment for information it excluded from the Exhibits to a Form S-1 registration statement ... as amended." The SEC agreed "that this information qualifies as confidential commercial or financial information under the Freedom of Information Act." Items Prosper submitted as Exhibit 10.3 and 10.4 to their filing(s) are being locked away until April 14, 2012.

Ah, the much-touted transparency that we've come to expect from Prosper management.

[onthefence]

Perhaps it's due to pending litigation.

But the point that Prosper is sorely missing is that the lender are NOT loaning borrowers money.  They are lending Prosper money.  If we don't know they have enough money to stay operational through out the duration of the loan, how can a lender possible evaluate the risk?

We might as well be blindly placing our money with Maddoff with no reliable financial review.

Or perhaps that is the point.  They do not have sufficient funds to cover 3 years of operations.  And they are better off with lenders not knowing that.