Chris Larsen, co-founder and former chief executive of E-Loan has established a copycat version of the UK's Zopa social lending network, a Web-based system that disengages the banking middle man and puts individual borrowers directly in touch with lenders.
Built on the same premise as Zopa in the UK, Prosper offers an eBay-style marketplace in which people list and bid on loans over an online auction platform. Individual borrowers say how much they need to borrow (up to $25,000) and the maximum interest rate they will pay. Interested lenders say how much they want to lend, and at what rate. Prosper takes the lowest price lenders and groups them into a loan.
San Francisco-based Prosper has been established by Chris Larsen and serial entrepeneur John Witchel with funding from Silicon Valley-based VC Benchmark (which also funds Zopa) alongside Accel, Fidelity and Omidyar.
Larsen's previous venture, E-Loan closed over $27 billion in consumer loans and positioned itself as a consumer champion. Larsen led E-Loan through a successful IPO in 1999, and oversaw the company’s acquisition by Popular, Inc. in 2005.
Zopa was established in February of last year by several members of the original management team behind the launch of UK Internet bank Egg. The company claims to have registered some 50,000 users and overseen several hundred loans worth millions of pounds with no bad debt.