Thinking About Thinking

Prosper Marketplace: Changing The World

Posted in Venture Capital by larrycheng on July 13, 2009

It is with great pride that I congratulate Prosper Marketplace on successfully completing their SEC registration process pioneering the first true auction marketplace for person-to-person lending (Prosper’s blog post). 

At the highest level, I believe this ushers in a fundamentally new model for auctioning all kinds of securities that will lead to tremendous innovation in the 21st century.  For Prosper, it is great to be back in business after a long quiet period working with the SEC (when we stopped lending).  Before the quiet period, we were growing at a torrid pace having enabled $178 million in loans to transact between millions of individuals in the United States.  Needless to say, we are excited to be back in business and back to the aid of consumers during this difficult financial time.  I would like to thank the SEC for working closely with Prosper and embracing innovation as regulators.

I am personally pleased to see Prosper back up and running because my Prosper portfolio was my top performing asset in 2008.  While economists agree that virtually every asset class excluding gold declined materially in 2008 – stocks, bonds, real estate, etc. – they missed one asset class: person-to-person lending.  I leant to Americans, and they paid me back reliably even during the downturn.  It seems every other day I get an email from Prosper saying those magic words: “One of your notes is paid in full”.  And now it gets even better.  Thanks to the SEC’s blessing, Prosper has now enabled lenders to re-sell existing notes to other buyers through a secondary market giving instant liquidity.  It’s a beautiful thing.

Finally, I would like to thank the Prosper management team and in particular Chris Larsen, founder and CEO.  When we invested in Prosper before the company launched, we thought Prosper had the potential to change the world.  We also knew we were trying to do something so audacious and so big, that there would be ups and downs along the way.  We have certainly had ups.  We have had some downs.  But, today, we are one big step closer to changing the world.  Congratulations.