By Sandy Miller, James Newell and Kelly O’Kane
“Banking is necessary – banks are not.” Bill Gates, Chairman, Microsoft, 1994
IVP is excited to announce our participation in a $70 million financing round for Prosper Marketplace, the fastest growing peer-to-peer lending company in the US. With over $1 billion in total loans originated on the platform to date, Prosper has demonstrated that it is the best place for lenders and borrowers to come together.
IVP is a leading later-stage venture capital firm based in Menlo Park, CA. We have been backing disruptive companies that transform industries since 1980. Our approach is to invest in 10 to 12 of the most dynamic and promising companies each year across all technology sectors. We are currently investing out of IVP XIV, a $1 billion fund raised in 2012 focused exclusively on later-stage venture capital and growth equity investments.
Over the past few years, IVP has developed specific franchise expertise in disruptive financial technology companies, with investments in Personal Capital, OnDeck, Indiegogo, Klarna and Yodlee – and now we are excited to welcome Prosper Marketplace to the IVP portfolio.
We have seen a major shift in the availability of and access to capital and expect that the biggest disruptions in the industry are yet to come. We believe that financial technology companies, like Prosper Marketplace, are revolutionizing the traditional banking and financial services industry – and we couldn’t be more thrilled to be a part of it. Here are a few reasons why we believe Prosper Marketplace is perfectly positioned to transform consumer lending:
Transformative Management Team
Aaron Vermut, Stephan Vermut and Ron Suber joined Prosper in early 2013 and immediately demonstrated why they are a team of world class leaders that we are thrilled to partner with. They took over a platform that originated $9M in loans in January 2013 and have grown originations to more than $100 million in April 2014. In 34 years of investing in the best companies in Silicon Valley and beyond, we have rarely seen this level of growth at Prosper’s level of scale. This turnaround has been truly remarkable and wouldn’t have been possible without the talented team members at Prosper. Aaron, Stephan and Ron have proven that they can attract not only lenders and borrowers to the platform, but also talented individuals throughout the organization.
Massive Market Creates Opportunity for Prosper
Disrupting the consumer lending market and the entrenched middlemen is no small undertaking. US consumer revolving credit represents an $850 billion market – with peer-to-peer lending capturing just $2.4 billion in 2013, up from $870 million in 2012. As the fastest growing platform in an explosively growing market, Prosper is ideally positioned to build a huge business as peer-to-peer lending enters the mainstream.
Industry Ripe for Disruption
Since the 1900s, banking intermediary fees have hovered around 2% – that’s more than 100 years without disruption! IVP shares Prosper’s vision to finally bring efficiency into this market. Peer-to-peer lending can eliminate as much as 60% of intermediary fees and the savings go directly to the participants on both sides of the platform. This means better rates for borrowers and higher returns for lenders. As a marketplace that directly connects borrowers and lenders, Prosper can bring huge benefits to all participants regardless of the prevailing interest rate environment.
Leading Technology Platform
Technology is at the absolute center of what Prosper offers to both borrowers and lenders. Dr. Elan Amir heads a fantastic product team that is on a constant mission to make a stodgy, manual process faster, easier, cheaper and more efficient. They have consistently delivered innovative products and features that advance this mission and make borrowing better. Prosper has a full roadmap of exciting initiatives and will continue to be the best platform for peer-to-peer lending.
Peer-to-peer lending is revolutionizing the consumer lending market and IVP is proud to partner with Prosper Marketplace as they lead this industry transformation.
Sandy Miller is a General Partner at IVP. He led the firm’s investment in many high profile companies such as Datalogix, Fleetmatics, ngmoco, OnDeck, One Kings Lane, Supercell, and Zynga. James Newell is a Vice President at IVP who recently rejoined IVP after graduating with an MBA from the Wharton Business School last year. Kelly O’Kane is an Associate at IVP.