There is some really big news out of Prosper today. They have not only received a new $20 million round of financing but there has also been a management change at the top of the company.
Interim CEO Dawn Lepore has resigned and been replaced by new CEO Stephan Vermut. Prosper has also named a separate president for the first time – that title has been held by the CEO until now. Aaron Vermut will become the president once he transitions out of his current position. Also coming on board is Ron Suber as Head of Global Institutional Sales. All three executives have worked together at Merlin Securities, a prime brokerage services firm that was acquired by Wells Fargo in July 2012.
A New Round of VC Funding Headed by Sequoia Capital
There is probably no bigger name in the Silicon Valley venture capital community than Sequoia Capital. They have funded some of the most successful names in business today including Apple, Google, Cisco, PayPal and Oracle just to name a few. Now, they will be adding Prosper to their portfolio of companies.
Sequoia Capital is leading a $20 million round that includes funding from all existing investors as well as the three new executives. Sequoia Capital Partner Pat Grady will join the Prosper Board of Directors along with new CEO Stephan Vermut. This reconstituted board was made possible after the resignations of David Silverman and Larry Cheng last month.
[Update: Prosper released their Form 8-K after I published this article and it should be pointed out that there is going to be a completely new Board of Directors. Founder Chris Larsen, Timothy Draper, Gary B. Coursey, Nigel Morris and Eric Schwartz have also resigned as members of the Board, effective January 14, 2013.]
A New Beginning for Prosper
This marks an exciting new chapter for Prosper. They will have a new look executive team that should bring some renewed vigor and energy to the company. I happen to know Ron Suber, Prosper’s new Head of Global Institutional Sales, who has been a reader of this blog for some time and we have communicated several times over the past year. In our conversation yesterday he stressed that the new management team will bring a clear vision, passion and creativity to Prosper and the p2p lending space.
They have a “100-day plan” of goals for their first hundred days and a list of nine things Prosper needs to do to reestablish itself. Suber is also going to bring a renewed focus to the investor side of Prosper’s business particularly when it comes to institutional investors. But he has assured me that retail investors will also be a priority.
My Take on This Change
While I have known a new round of funding was coming (although I was pleasantly surprised at the size of the round) I had no idea about the management changes until my phone conversation with Ron Suber yesterday. These changes have the potential to propel Prosper forward on to a new trajectory of growth.
The one piece that has been concerning some investors is the class action lawsuit against Prosper. The suit is still ongoing and the new management team would not comment on this matter but based on the new round of funding clearly the lawyers at Sequoia Capital are not too concerned about it.
Last year Lending Club caught all the headlines for their astounding growth and high profile boardnominations. No doubt they will continue to do well in 2013. But I think this year it will not be all about Lending Club. Prosper has an excellent chance to establish themselves as the strong number two in the p2p lending space.
Clearly this is a shot in the arm for Prosper at a time when they need it. I expect we will see increased volume at Prosper very soon, probably as soon as the Prosper Funding LLC changes are implemented on February 1st. I will be in regular contact with the new management team and will report back on new changes as they happen. The next few months will be very interesting.
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.