Prosper’s Valuation Leaps to $1.87 Billion on Latest Fundraising

Prosper Marketplace Inc. has seen a surge of borrowers flocking to its website to get loans. Now its valuation is soaring, too.

Prosper raised $165 million from a group of investors led by a unit of Credit Suisse Group AG’s asset-management arm, according to a statement set for release Thursday. The cash infusion values the closely held company at about $1.87 billion, Chief Executive Officer Aaron Vermut said. That’s almost triple what it was worth when the firm last took funds in May.

Until two years ago, Prosper was struggling to stay in business as it worked to resolve an investor lawsuit and comply with securities regulations. Vermut took over in early 2013 and, along with a new management team, helped bolster underwriting and boost revenue.

“It’s a big validation of what we’ve been doing,” Vermut said in a phone interview. “The company’s way better off than it was.”

Other investors include JPMorgan Chase & Co.’s asset-management arm, SunTrust Banks Inc., United Services Automobile Association, BBVA Ventures, Neuberger Berman, Passport Capital and Breyer Capital, according to the statement. San Francisco-based Prosper said it will use the money to fund its growth, build new products and promote its brand nationally.

Consumers are increasingly turning to online marketplaces to consolidate debt and pay for big purchases. The main product at Prosper and its larger competitor, LendingClub Corp., are loans for up to $35,000 that carry a fixed interest rate over three or five years.

Peer-to-Peer

When they started in the last decade, the companies were often called peer-to-peer lenders because they pioneered a way of connecting borrowers over the Internet with individuals who wanted to fund them. More recently, institutional investors have gotten in on the act, fueling a surge in originations.

Prosper helped issue a record $595 million in loans in the first quarter, it said on March 31, after $1.6 billion in 2014. The company earns fees for arranging and servicing the debt.

Vermut said having JPMorgan and Credit Suisse’s asset-management divisions as investors would help Prosper attract more high-net-worth investors to fund loans in its marketplace. SunTrust and USAA’s involvement, in contrast, could help it draw in new borrowers, he said.

Prosper is unlikely to go public this year, Vermut said. LendingClub raised $1 billion in December in an initial public offering that drew attention to the industry and its growth.

“We’re working hard to create a really great company,” Vermut said. “We have some work to do yet.”

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