FDICAdvisory Committee on Economic InclusionMarch 28, 2007

First Wave (Web 1.0)
        - What was New?
        - Streamlined existing processes
        - Value creation = disintermediation
        - What was the Same?
        - Source of value was the company
        - Company dictated the product

            Offline                               Online                Market      

Books      

Stocks      

Loans      

Second Wave (Web 2.0)
        - What is New?
        - Value creation: communication, community, commerce
        - Source of value is people
        - Company is servant infrastructure

             Web 1.0                         Web 2.0               Market      

Videos      

Guides      

Loans      

Prosper is like an “eBay” for Money
        - Marketplace for Money
        - Brings together borrowers with people who have money to lend
        - Administers lending process including payments and collections
        - Open access to Consumer Credit Market 
        - Anyone with as little as $50 can lend
        - Community decides where and why to grant credit
        - Leverages power of community
        - Groups, friends and endorsements provide
        - Vouching benefit
        - Shame factor

Backing
        - Series A & Series B
        - $20 million raised
        - Outside Directors
        - Jim Breyer, Accel Partners
        - Wal-Mart, Facebook
        - Bob Kagle, Benchmark Capital
        - eBay, E-Loan
        - Larry Cheng, Fidelity Ventures
        - Verid Board
        - Paul Hazen
        - former CEO Wells Fargo

Prosper’s Early Results

Users:               			235,000

Loans by $:   	     	    $47,000,000

Borrower Loans:                		    8,800

Promissory Notes:			450,000

Payments to Lenders:	        1,200,000

Discussion Posts:			260,000

High Growth, Good Credit Quality

Loan Listings

Listing Summary

Credit & Employment Data
| AA   | A       | B       | C       | D       | E       | HR      |
|------|---------|---------|---------|---------|---------|---------|
| +760 | 759-720 | 719-680 | 679-640 | 639-600 | 599-560 | 559-520 |

Description

Group Information

Endorsements

Questions & Answers

Bid History

Lender Bidding

Estimated ROI

Diversified Lender Portfolio

Transaction fees

BORROWER

Closing fees

1% 	AA - D

2% 	E - HR

Min. $25

LENDER

Servicing fees

0.5% 	AA - A

1% 	B - HR

Per annum

BORROWER

Failed 

payment fee

$15

First incident 

per billing

period

What We Do/ What Community Does
        - What we do
        - Perform ID, security, BSA, and bank account validation
        - Handle loan disclosures and privacy protection
        - Administer loan servicing and collections
        - Set Marketplace standards, rules, and etiquette
        - What community does 
        - Makes credit and pricing decisions
        - Leverages reputation through groups and endorsements
        - Introduces and helps new members
        - Monitors and reports unacceptable behavior

Per Loan Economics
|                     | Prime  | Near-Prime | Sub-Prime |
|---------------------|--------|------------|-----------|
| Average Loan        | $8,000 | $7,500     | $3,100    |
| Total Revenue       | $195   | $245       | $150      |
| Origination Expense | ($13)  | ($18)      | ($42)     |
| Servicing Expense   | ($12)  | ($17)      | ($23)     |
| Gross Margin        | $170   | $210       | $85       |
| Marketing Expense   | ($100) | ($90)      | ($65)     |

Returns by Grade
|              | AA     | A     | B     | C     | D     | E      | HR     |
|--------------|--------|-------|-------|-------|-------|--------|--------|
| Net Interest | 10.35% | 12.2% | 14.3% | 16.4% | 19.9% | 22.0%  | 20.%   |
| NetDefaults  | -0.7%  | -1.4% | -3.4% | -4.0% | -7.9% | -18.7% | -27.8% |
| NetReturn    | 9.6%   | 10.8% | 10.9% | 12.4% | 11.9% | 3.3%   | -7.0%  |
|              | Prime | NearPrime | SubPrime | Total |
|--------------|-------|-----------|----------|-------|
| Net Interest | 11.4% | 16.9%     | 21.3%    | 16.5% |
| NetDefaults  | -1.1% | -5.1%     | -24.0%   | -8.0% |
| NetReturn    | 10.3% | 11.8%     | -2.7%    | 8.5%  |

Borrowing Groups

Borrowing Groups

Group Leader Rewards

Match Rewards 

(Paid by Prosper)

0.5% 	AA – D

0% 	E – HR

Percentage of loan amount

Payment Rewards  

(Optional, paid by members)

1% 	AA – A

2% 	B – D

4% 	E – HR

3rd Party Applications

Research Papers

Student Lending Market Opportunity Assessment

Prosper Regression Project - Fundability Study

Analysis of Interest Rates for Lenders on Prosper.com

Case Study – Dec. 2006

Prosper in the News

Prosper in the Blogs

Prosper Community Meet & Greets
        - New York (cellardoor)
        - NorCal (BigGulp)
        - SoCal (DebInVenice)
        - Atlanta (PolarC)