Social Lending Marketplace Prosper Launches

Posted by: Rob Hof on February 05, 2006

Mike Arrington has the news: Prosper (formerly known as CircleOne), founded by E-Loan cofounder Chris Larsen, has launched—very softly. According to the site:

People who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy.

Needless to say, that’s a challenging sort of marketplace—by the company’s own description, a sort of eBay for loans. It looks like a lot of thought and planning have gone into setting it up, though a couple of the featured loan requests might give some lenders pause: One is $3,000 for moving expenses for a “lapsed artist” (though it has 14 bids already!) and another “credit grade E” person wants $20,000 at 3% to pay off a high-interest second mortgage (no bids yet).

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How’s it work? Essentially, people who want a loan of up to $25,000 put out bids at a maximum interest rate they’re willing to pay, and people who want to lend bid in increments starting at $50. Groups of borrowers can be formed that can build reputations with good payment histories. Prosper charges borrowers a fee equal to 1% of the funded loans, as well as a 0.5% annual loan servicing fee to lenders.

The company says on its site that it’s funded by Benchmark Capital (which also backed E-Loan and a U.K.-based person-to-person lending startup, Zopa), as well as eBay founder Pierre Omidyar’s and his wife Pam’s Omidyar Network, Accel Partners, and Fidelity Ventures.

Update: Get the full story here.

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Reader Comments

Ian

November 1, 2006 05:29 PM

I always had a difficult time believing this would work, but I guess it does, so far. I wonder how much the larger lenders have at stake.

Brian Mullally

May 23, 2007 08:35 PM

While Prosper.com caters mainly to the US market, there’s another site called GlobeFunder.com which caters to the global crowd, especially those living in the third world.

Steve

June 16, 2007 03:51 AM

If you're considering joining as a lender, Prosper is giving you $25 to join now. You have to be referred, though. Just click here and it will take you to the right place.

I've been lending for about a year and have made a 13% return. So far, so good.

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