The majority of the capital injection was supplied by the investment firm Francisco Partners. Two additional venture capital firms – Institutional Venture Partners and Phenomen Partners – were also involved. Prosper chose Francisco Partners in spite of having received offers with a higher valuation. The platform felt that Francisco promised a more alluring balance of insight and cash. David Golob, an Executive at Francisco, will become a director at Prosper as part of the deal.
“Frankly, we went with Francisco because they were the perfect match.”
Prosper has originated upwards of $1 billion worth of loans – a total it hopes to double by the year’s end. The platform will look to use the money raised in this latest round to fuel its continued growth. The cash will finance an expanded marketing campaign, the development of new types of loans, and internal growth (such as new offices in San Francisco, new employees, etc.).
Less than a year ago Prosper raised $25 million in a round headed by BlackRock. According to one source, Prosper’s valuation has catapulted upwards six-fold since that last fundraising effort – now standing at around $600 million. The fast-rising platform is reportedly content to wait and watch as its rival Lending Club goes public. Vermut explained:
“If it goes really well, it will be a validation for the space. We’re not there yet. We’re just operators, building our business.”
In Europe, there will be many paying close attention to the news of fundraises and potential IPOs stateside. A tide of institutional capital is poised to wash across the European alternative finance space. The US experience will serve as a useful instructional tool for the various European platforms.