On the eve of the LendIt Conference Prosper has announced their largest investment round ever. They have closed on a $70 million round from Francisco Partners, Institutional Venture Partners and Phenomen Ventures.
This monster round comes on the heels of Prosper crossing $100 million in loans issued in April and the $1 billon milestone just one month ago. It has clearly been a good year for Prosper so far.
I chatted with Prosper CEO, Aaron Vermut, about this big news – it was the second time in the past week that we have talked about some very positive news for Prosper.
The $70 Million Includes a $20 Million Secondary Round
Of the $70 million total investment, $50 million is going on to Prosper’s balance sheet. The remaining $20 million is a secondary round where some existing shareholders are cashing out.
While the 8-K will be out with all the details in a couple of days sources tell me that this new round is at a $600 million valuation. This is up from a $100 million valuation less than eight months ago.
When I asked Vermut what he would be using this new money for he talked first about expanding the team. Prosper is opening up a second office in Phoenix, Arizona that will be a loan verification and underwriting center. Vermut said that there is a lot of underwriting talent in Phoenix and they are looking to tap into that expertise at a much lower cost than in San Francisco.
Prosper’s lease at their current location in San Francisco is up at the end of the year so they will be moving to a new location later this year. They expect to have a total of 150 employees by the end of the year split between the two locations.
Both Vermut and Ron Suber, president of Prosper, have said to me recently that Prosper is close to becoming cash flow positive. Then why raise so much money? When I posed that question to Vermut he had an interesting reply. He said while they didn’t need to raise $70 million, having a strong balance sheet will help the company in many ways – not the least of which is in recruiting more top talent for their management team.
Prosper will be expanding their board from five seats to seven. David Golob from Francisco Partners will be joining the Prosper board along with Aaron Vermut himself.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.