Alternative Finances

New Deal Could Cut Prosper Marketplace's Value By Two-Thirds

Once a unicorn, always a unicorn?

In Silicon Valley, maybe not so much these days — online P2P lender Prosper Marketplace is considering a financing round that could drop its value to somewhere around $550 million.  Not chump change, to be sure — but a far cry from the $1.9 billion valuation Prosper commanded as recently as 2015.

According to reports, Prosper may be looking to sell a roughly 10 percent stake in its business to a Chinese conglomerate — Linca — in a deal that will reportedly drop the marketplace's value by about 2/3.

The deal would see Linca invest $50 million in Prosper at a valuation of about $550 million.

Prosper raised about $165 million in a financing round in late 2015 led by Credit Suisse Group AG’s Next Investors. That round left Prosper with a valuation scraping $2 billion. Those funds were used to purchase the maker of a personal finance app for smartphones and accelerate the growth of its unsecured-consumer lending business.

But the marketplace shifted greatly between 2015 and today — as did the appetite for marketplace loans from money managers. Prosper has struggled to adjust to that situation — and revenue has taken a hit. In March, the company reported an annual loss for 2016 of $118.7 million, compared with a loss of $26 million for 2015.

Prosper’s newly minted CEO, David Kimball, took over the top spot in December, and profitability has been the goal. In February, Kimball agreed to sell $5 billion worth of Prosper’s loans to a consortium of investors over the next two years along with warrants to purchase shares representing 35 percent of the company. That deal — which includes player like Soros Fund Management LLC and investment bank Jefferies LLC — helped Prosper stabilize some.

The investment from Linca would be designed to provide Prosper with capital to fund future investments, according to Wall Street Journal reports.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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