Lending platform Prosper continues to prosper with $25 million of new funding.
Prosper powers a peer-to-peer marketplace that connects people who need to borrow money with people who can lend it to them. This round follows closely on the heels of the last one — Prosper closed $20 million in January and has raised nearly $120 million in venture capital since its founding in 2006.
Since then, the peer-to-peer lending industry has gain major momentum, and this financing will fuel Prosper’s growth.
Traditionally, people take out loans with banks. Prosper cuts the banks out of this process by connecting people who want to invest money directly with people who want to borrow money. Borrowers list loan requests between $2,000 and $35,000. Individual lenders invest as little as $25 in each loan and earn returns of up to 9 percent.
Prosper has 1,960,000 members and has funded $630 million in personal loans to date.
The financial crisis significantly undermined the trust that the American people have in banks. At the same time, Internet marketplaces have grown significantly, and financial services remains one of the hottest areas for startups to take on. Borrowers and investors are both looking for alternatives to banks when it comes to their financial needs, and companies like Prosper and rival Lending Club are there to provide that alternative.
Prosper had a few issues with the SEC over the years, shutting down in 2008 after receiving a cease-and-desist letter for not properly registering under the Securities Act. It’s back on track now and claims to be growing at 100 percent year-over-year in revenue and new loans.
Stephan Vermut joined as CEO earlier this year, when Sequoia Capital led Prosper’s sixth round of funding, along with his son, Aaron, who will serve as president. Before coming to Prosper, the Vermuts founded a company called Merlin Securities that Wells Fargo bought in 2012.
Sequoia also led this round, with participation from BlackRock.
Christopher Bishko, a partner at Omidyar Network who leads investment in technology-enabled financial services is listed as a director, along with Rajeev Date, the former deputy director of the United States Consumer Financial Protection Bureau.
Prosper is based in San Francisco.