By Gillian Tan, Telis Demos and Ianthe Jeanne Dugan
Prosper Marketplace Inc. has completed a funding round that
values the online lending service at $1.9 billion.
The new fundraising round raised about $165 million and was led
by Credit Suisse Group AG's Next Investors, a fund within the
bank's asset management group, the company confirmed Wednesday.
J.P. Morgan Chase & Co.'s Asset Management unit, SunTrust
Banks Inc. and USAA also made sizable investments, along with
investors including Neuberger Berman Group LLC, BBVA Ventures,
Breyer Capital and Passport Capital.
The firm is poised to announce the round Thursday. Prosper Chief
Executive Aaron Vermut said the firm would use the funding to drive
its rapid growth and marketing, with a continued focus on consumer
credit.
"It's a broader, secular change in the way financial services
are being devised and delivered and funded," Mr. Vermut said in an
interview. "There's a ton of interest in the space."
He said the firm would consider acquisitions and has no imminent
plans to go public.
Prosper is one of the pioneers in "peer-to-peer" or
"marketplace" lending. Unlike traditional banks that make loans
with their own capital, marketplace platforms connect borrowers
with both individuals and institutions that fund the loans and
collect interest. Prosper collects fees on the loans it
arranges.
Investors, attracted by the rapid growth of the industry and the
potential to profit from public offerings, have been pouring funds
into online lenders at a fast clip.
Lending Club Corp., a peer-to-peer lender, and On Deck Capital
Inc., an online business lender, went public last year. The
companies aim to capitalize on the diminishing role of big banks in
the business of lending to individuals and small businesses.
Prosper's $1.9 billion valuation is a big jump from the $650
million it achieved in a fundraising early last year, reflecting
the company's rapid growth. In March, it crossed $3 billion in
loans originated through its marketplace, according to company
statements, up from $1 billion in April 2014. Prosper generated $81
million in net revenue in 2014, a 342% increase over 2013,
according to public filings.
Prosper started arranging peer-to-peer loans before the
financial crisis. But it was slow to adapt to the Securities and
Exchange Commission's decision in 2008 requiring that such loans be
registered as public securities, and it went through a long legal
battle over the issue.
In 2013, a team including Mr. Vermut, Executive Chairman Stephan
Vermut and President Ron Suber took funding from a group of
backers, including venture-capital firm Sequoia Capital and
investment firm BlackRock Inc., to relaunch Prosper. The company
last year added $70 million in additional funding led by
private-equity firm Francisco Partners.
Prosper is exploring new ways of bringing borrowers into its
marketplace. In January, it paid $21 million to buy software firm
American Healthcare Lending, which will enable it to arrange loans
for people seeking elective surgery and possibly for other
purposes. It also said it had joined with with a group of community
banks that planned to use Prosper's platform to make consumer
loans.
Write to Gillian Tan at gillian.tan@wsj.com, Telis Demos at
telis.demos@wsj.com and Ianthe Jeanne Dugan at
ianthe.dugan@wsj.com
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