FDICAdvisory Committee on Economic InclusionMarch 28, 2007

2

First Wave (Web 1.0)

What was New? Streamlined existing processes Value creation = disintermediation

What was the Same? Source of value was the company Company dictated the product

What was New? Streamlined existing processes Value creation = disintermediation

What was the Same? Source of value was the company Company dictated the product

Offline Online Market

Books

Stocks

Loans

3

Second Wave (Web 2.0)

What is New? Value creation: communication,

community, commerce Source of value is people Company is servant infrastructure

What is New? Value creation: communication,

community, commerce Source of value is people Company is servant infrastructure

Web 1.0 Web 2.0 Market

Videos

Guides

Loans

4

Prosper is like an “eBay” for Money

Marketplace for Money Brings together borrowers with people who have money to lend Administers lending process including payments and collections

Open access to Consumer Credit Market Anyone with as little as $50 can lend Community decides where and why to grant credit

Leverages power of community Groups, friends and endorsements provide

Vouching benefit Shame factor

5

Backing

Series A & Series B $20 million raised

Outside Directors Jim Breyer, Accel Partners

Wal-Mart, Facebook

Bob Kagle, Benchmark Capital eBay, E-Loan

Larry Cheng, Fidelity Ventures Verid Board

Paul Hazen former CEO Wells Fargo

6

Prosper’s Early Results

Users: 235,000

Loans by $: $47,000,000

Borrower Loans: 8,800

Promissory Notes: 450,000

Payments to Lenders: 1,200,000

Discussion Posts: 260,000

7

High Growth, Good Credit Quality

-2,0004,0006,0008,00010,00012,00014,00016,000Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06MonthMonthly Registrations -10,00020,00030,00040,00050,00060,00070,00080,000Cumulative RegistrationsLendersAll RolesCummulative

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

Mar

-06

Apr-0

6

May

-06

Jun-

06

Jul-0

6

Aug-0

6

Sep-0

6

Oct-06

Nov-06

Dec-06

Jan-

07

Closing Month

Mo

nth

ly F

un

ded

Lo

ans

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Cu

mu

lati

ve F

un

ded

Lo

ans

Sub-Prime Near-Prime Prime Cumulative

8

Loan Listings

9

Listing Summary

10

Credit & Employment Data

AA A B C D E HR

+760759-720

719-680

679-640

639-600

599-560559-520

11

Description

12

Group Information

13

Endorsements

14

Questions & Answers

15

Bid History

16

Lender Bidding

17

Estimated ROI

18

Diversified Lender Portfolio

19

Transaction fees

BORROWER

Closing fees

1% AA - D2% E - HRMin. $25

LENDER

Servicing fees

0.5% AA - A1% B - HRPer annum

BORROWER

Failed payment fee

$15First incident per billingperiod

20

What We Do/ What Community Does

What we do Perform ID, security, BSA, and bank account validation Handle loan disclosures and privacy protection Administer loan servicing and collections Set Marketplace standards, rules, and etiquette

What community does Makes credit and pricing decisions Leverages reputation through groups and endorsements Introduces and helps new members Monitors and reports unacceptable behavior

21

Per Loan Economics

  Prime Near-Prime Sub-Prime

Average Loan $8,000 $7,500 $3,100

Total Revenue $195 $245 $150

Origination Expense ($13) ($18) ($42)

Servicing Expense ($12) ($17) ($23)

Gross Margin $170 $210 $85

Marketing Expense ($100) ($90) ($65)

22

Returns by Grade

  AA A B C D E HRNet Interest 10.35% 12.2% 14.3% 16.4% 19.9% 22.0% 20.%

NetDefaults -0.7% -1.4% -3.4% -4.0% -7.9% -18.7% -27.8%

NetReturn 9.6% 10.8% 10.9% 12.4% 11.9% 3.3% -7.0%

  PrimeNear

PrimeSub

Prime Total

Net Interest 11.4% 16.9% 21.3% 16.5%

NetDefaults -1.1% -5.1% -24.0% -8.0%

NetReturn 10.3% 11.8% -2.7% 8.5%

23

Borrowing Groups

24

Borrowing Groups

25

Group Leader Rewards

Match Rewards (Paid by Prosper)

0.5% AA – D0% E – HRPercentage of loan amount

Payment Rewards (Optional, paid by members)

1% AA – A2% B – D4% E – HR

26

3rd Party Applications

27

Research Papers

Student Lending Market Opportunity Assessment

Prosper Regression Project - Fundability Study

Analysis of Interest Rates for Lenders on Prosper.com

Case Study – Dec. 2006

28

Prosper in the News

29

Prosper in the Blogs

30

Prosper Community Meet & Greets

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