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[Fred93]

Fred has updated his blog tonite, with some talk about the Feb 1st injection of cash into Prosper, sustainability of the business, and a chart showing prosper's growth.

http://fred93blog.blogspot.com/2010/02/prospercom-bankruptcy-postponed.html

[ira01]

Prosper's VCs invested $40M.  They would have to have rocks in their head to double down and pour in another $20M-$50M.  Prosper is never going to be able to originate $50M a month -- that is five times their best month ever (and seven times their 12-month moving average originations during the time before the SEC shut-down).  Meanwhile, back then Prosper was the recipient of nothing but puff-piece reports that drove additional customers to Prosper, because Prosper could bullshit "reporters" into believing Prosper's spin about Prosper's actual performance.  Now -- not so much.  The Big Money piece is the kind of publicity Prosper can look forward to, as it becomes impossible to spin the fact that 40% of all Prosper loans wind up in the crapper.  Sure, Prosper can blather on about how "this time it's different," but I don't think that is going to fly. 

[Fred93]

Prosper's VCs invested $40M.  They would have to have rocks in their head to double down and pour in another $20M-$50M.

I don't expect the early big investors to come up with the next big chunk, and indeed you will note that they have not dumped in another big bucket-o-money, but have instead provided only a small amount of money to keep the thing runnin' while they extend the search for some other guy to come in with a big investment.  (Decision to extend a bridge loan is based not so much on feelings about probability of eventual success of the business as it is on the probability of finding the next big investor, which is a necessary condition of eventual success.)

Nigel Morris on the other hand is a mystery.  It seemed possible that his investment, board seat, seating of a former employee in the company, etc was a prelude to a further larger investment ... but that hasn't happened.

[God-Father]

Nigel Morris on the other hand is a mystery.  It seemed possible that his investment, board seat, seating of a former employee in the company, etc was a prelude to a further larger investment ... but that hasn't happened.

Maybe he became a regular reader of your blog Fred.  That would explain the mystery.

[ira01]

If there was anyone with up to $50M laying around who wanted to invest it in a P2P platform, I honestly don't know why they would do so in Prosper.  It would make more sense to just start a new platform.  That way you would own the whole company, not just the half or whatever fraction a new investor might get in Prosper.  At one time certainly Prosper had the early-mover advantage, as well as good PR.  But that is all gone now.  As you point out, originations are now down to the same level they were in Prosper's first few months of business.  And the very name "Prosper" will soon be (if it isn't already) a negative, as it is associated with all of Prosper's mistakes.  Sure, Prosper has a pretty nice website -- but big deal, I bet that could be duplicated pretty cheap.  A new company would have to obtain SEC registration, but that's probably easier now that LC and Prosper have paved the way.  And a new company could advertise itself as "better than Prosper," pointing out all the things it did differently to avoid Prosper's problems. 

I'm not suggesting that a new P2P platform would be a good idea -- just that it seems to be a better idea than pouring boatloads of money into the sinking ship of Prosper. 

[NewHorizon]

... while they extend the search for some other guy to come in with a big investment.  (Decision to extend a bridge loan is based not so much on feelings about probability of eventual success of the business as it is on the probability of finding the next big investor, which is a necessary condition of eventual success.)

I'm not so sure there's a "search" under way, per se.  Funding may have already been identified and is in the pipeline  - perhaps under negotiations and/or perhaps waiting for the outcome of some event between now and April 1st.  In short, Prosper MIGHT be be closer to additional funding than you kinda implied both here and in the blog.

[onthefence]

I'm not suggesting that a new P2P platform would be a good idea -- just that it seems to be a better idea than pouring boatloads of money into the sinking ship of Prosper. 

I think that Prosper's database & access to historical loan information is the best thing they have going for themselves.

As far as them making a go of it, Lending Club is still gaining loan volume on a month by month basis.  But they are still a long way off from $50 million.

Source: http://www.lendingclubstats.com/

Of course the other question is how well does p2p lending costs scale.  Is there a lot of overhead that is not necessary when volumes get big?  Something tells me that getting deadbeats to pay up does not scale well on a volume basis.

[Fred93]

I'm not so sure there's a "search" under way, per se.  Funding may have already been identified and is in the pipeline  - perhaps under negotiations and/or perhaps waiting for the outcome of some event between now and April 1st.  In short, Prosper MIGHT be be closer to additional funding than you kinda implied both here and in the blog.

I've seen this up close several times.  It is almost always a search.  Presentation after presentation to VC after VC.  You are always in discussion with a couple of them, but the discussions don't conclude.  You never know how near or far you are away from closing. 

I'm helping one startup thru this now.  They got some "term sheets" (informal offers) before the big downturn, but when the economy turned down they were all withdrawn.  The company hunkered down and survived, but now is runnin' on vapors.  They've given their pitch to 20 or so VCs and a half dozen rich individuals, but hasn't found the right fit yet.  The process involves more than just finding someone who would like to invest.  Its also about management coming to an understanding about how much he's gonna have to give away.  I know people who would invest, but only at a lower valuation than the entrepreneurs are lookin' for ..  so the process continues. 

[nonattender]

I'm not so sure there's a "search" under way, per se.  Funding may have already been identified and is in the pipeline  - perhaps under negotiations and/or perhaps waiting for the outcome of some event between now and April 1st.  In short, Prosper MIGHT be be closer to additional funding than you kinda implied both here and in the blog.

I've seen this up close several times.  It is almost always a search.  Presentation after presentation to VC after VC.  You are always in discussion with a couple of them, but the discussions don't conclude.  You never know how near or far you are away from closing.

This is a touching anecdote, however, I would suggest to you that Prosper is not your ordinary "start-up".
I doubt they're running around the Valley going "Hey, want to hear about my online laser-pointer auction?"

Then again - who knows? - maybe that's exactly what they might say...

-t

[bamalucky]

I would suggest to you that Prosper is not your ordinary "start-up

No doubt. Most start-ups don't lie repeatedly to the press & it's customers,lie in court,get SEC sanctions & pay people to brag & lie.

[JammingJAY]

I would suggest to you that Prosper is not your ordinary "start-up

No doubt. Most start-ups don't lie repeatedly to the press & it's customers,lie in court,get SEC sanctions & pay people to brag & lie.

Maybe prosper plans to IPO on Pink Sheets?

[alexpkeaton]

Maybe prosper plans to IPO on Pink Sheets?

I'd buy that for a dollar.

[mossy]

Seems like it would be easy to avoid bankruptcy. Just fire everybody except a few IT folks to keep the servers up.

It's not like their current employees are doing any real work -- like for example, collecting debts or verifying borrower identity/income.

[mothandrust]

And speaking of a dollar, have the CEO work for a dollar until the company is profitable.

[pacino58]

Interesting post by Prosper on their blog.

Prosper Blog | February 5th, 2010 at 12:34 pm
We maintain all lender funds in a separate account at Wells Fargo Bank “for the benefit of” our lenders. These funds are not commingled with any of our other assets. If we filed for bankruptcy, we don’t believe these funds would be subject to claims by our creditors.

Well maybe the funds would not, since they are held for the benefit of the lenders but interestingly enough they did not comment about the actual loans.