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FROM DISRUPTION TO REVOLUTION:

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Transcript of FROM DISRUPTION TO REVOLUTION:

design by Dóri Sirály for Prezi
Start
Step 1
Step 2
Step 3
Goal
FROM DISRUPTION TO REVOLUTION:
THE TIPPING POINT
Have you ever looked at something
and thought...
There MUST be a better way?
New ways of doing old things are being
discovered every day, in every corner of your life...
Which is exactly what all the people in this room are doing, in sectors like:
Student Loans
Real Estate
Consumer Credit
Business Loans
Debt Consolidation
So what does disruption look like in the world of personal finance?
We, the online direct lending and peer-to-peer finance community have turned lending from a manual process into an automated and efficient exchange.
The Industry's Past Year

Dramatic
growth
• Media frenzy - focus on borrowers
E
A
U
ducation
wareness
nderstanding
• Capital & strengthened partnerships
Key Industry Trends and Focus
Continuous
Improvements
Pricing, Risk & Credit Models
Risk Models
that Work...
Delivering on
our Return
Expectations
Fostering
Quality Growth
Making Larger
Loans Where
Appropriate
Improving the Mobile & Borrower Experience
Fraud & Identity Screens
Validation & Verification Process
Investors
• Frequent and High Cash Flow
• Zero
high frequency traders
• Third Party Platforms (Orchard, NSR, Notex360, etc.)
Borrowers
DAYS TO FUND
8 DAYS
3.5 DAYS
RATES
LOWER
INCREASED EFFICIENCIES
• Onboarding
• Mobile Optimization
• Electronic Verification
The Banks
EAU
Work closely with large community & regional banks that:
• embrace technology
• are progressive in thought
• understand & believe in the service & credit model
• have good relationships with regulatory agencies
• accepts documentation
• not only send us borrowers, but also buy our top rated loans
Where we are
OPPORTUNITY!
THE CHALLENGE
IS ON
The
Total Addressable Market
for all of us is
far larger
than I had imagined

SPRING TRAINING
IS OVER!
We are all changing consumer behavior for good,
and it's not going back
.
Mortgages & more
Lowering CPA
Diversifying borrower channels
OF ONLINE DIRECT
It's the top of the first...
We've recognized the competition...
...it's the
Education
Awareness
&
Understanding
of borrowers
Lenders
DAYS TO FUND
8 DAYS
3.5 DAYS
RATES
LOWER
INCREASED EFFICIENCIES
• Document Upload Enabled
• Mobile Optimization
• Electronic Verification
LOAN PURPOSE
• Includes borrower information
• Includes testimonials
Consumer Adoption & Expectations Continue to Change
Spreading the Word
Traditional Media

Majority of Investment Banking Conferences

VC/PE and Fin Tech events

Regulators

NY Fed.....Federal Reserve in DC

SBA

Reuters

Social Media

Milken

ABS/Securitization conferences

Pension and Endowment events

Law Firms

Buy Side/Sell Side

Meet ups around the country

We are in the business of
DEMOCRATIZING
Credit
There are many exchanges for equities, options, futures and commodities:
And now we have many exchanges for credit...finally
• Active, passive, index, leverage, separate account
money managers/RIA's, retirement accounts, IRAs
• Loan Performance
BEYOND DEBT CONSOLIDATION
• Increased loan demand for home improvement, auto, motorcycles, vacations, special occasions, recereational vehicles, & taxes
• Increased loans with "Small Business" as stated purpose

Of top
188
consumer banks by deposits ...

42
don’t market personal loans on their website and
66
severely minimize it.

121
do not market an “installment loan”

Of the banks that do market personal loans, the majority only offer an inefficient manual application process with many forms, that takes numerous days or simply say...
"please stop by a branch or call us to apply"

Credit cards have often become the way people borrow from banks
CONSUMER LENDING
And the speed of disruption is vastly increased by new, innovative online services
Expansion into new categories
Lender Diversity:
Capacity,
Return Expectation,
Commitment,
& Retail

• Low Duration
Expected Prosper Loan Duration (in months)
by Rating and Term
Jan 1,2014 - April 9, 2014
DEEPER
PEER-TO-PEER
INSIDE
Transparency
• The consumer is changing how and why he or she interacts with the world
• We need to meet and exceed their expectations:
- Level of Service
- When, where, and how we deliver products & solutions
• Consumers are very rapidly adopting the solutions that all of us are bringing to market....
- 178,094 loans
totaling over
$2.4 billion
originated in 2013 (P + LC)
• Music, Travel, and the end of the landline
Traditional/Digital Marketing
...it is still not in this room...
DATA
-
72,733 loans
totaling over
$986 million
originated in Q1 2014 (P + LC) already!
• Yield on equivalent risk and term products are less
• Document Upload Enabled
FROM DISRUPTION TO REVOLUTION:
THE TIPPING POINT
OF ONLINE DIRECT
CONSUMER LENDING
Trust
DISRUPTION
is becoming
REVOLUTION
We are the new vehicles for finance.
...despite regulatory, legislative, and political aspects to overcome. Sound familiar?
Finance is the next frontier of disruption.
It looks like this...
Source: Federal Reserve
Neither Prosper Funding LLC nor Prosper Marketplace, Inc. are registered as an investment adviser with any federal or state regulatory agency. The information contained in this presentation is for informational purposes, and should not be construed as individually tailored investment advice or as a recommendation with respect to any security or investment approach. This presentation has been prepared without regard to the circumstances and objectives of the conference’s participants and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any participant. Each participant should consider the appropriateness of any investment decision having regard to his or her own circumstances, the full range of information available and appropriate professional advice. Prosper Funding LLC and Prosper Marketplace, Inc. recommend that each participant seek independent investment and financial advice concerning any services or investments discussed in this presentation.

Borrower Payment Dependent Notes or “Notes” are offered pursuant to the Prospectus which accompanies this presentation and which is also available at www.prosper.com/prospectus. Persons considering investing in Notes should review the Prospectus in its entirety.

This presentation includes forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management and is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. You should carefully read the factors described in the “Risk Factors” section of the Prospectus for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.

All forward-looking statements speak only as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements above and in the Prospectus. We undertake no obligation to update or revise forward-looking statements that may be made in this presentation to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.



Disclosures
Duration is the Macaulay duration in months calculated on cash-flow model of the upper-limit annualized loss rate for each rating grade (so 1.99% for AA, 3.99% for A, etc). Exact portfolio composition and differences in cash-flow timing and magnitude may cause actual duration values to differ from those presented in the exhibit.
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