Prosper: Management and Investors
February 14th, 2006Prosper: Management and Investors
A friend alerted me to the launch of Prosper.com, a person-to-person lending system (read: disintermediating banks). I was super excited when Zopa.com launched in the UK and thought it was only a matter of time before the US would have its own service.
So Prosper has arrived. It has an amazing management team and investors (E-Loan co-founder is CEO, investors include Bob Kagle from Benchmark and Jim Breyer from Accel).
So if you are tired of getting .5% interest from your local bank who in turn loan your money at 8-18% interest, you may want to check out Prosper.
This model definitely beats the "When Banks Compete You Win" model where the banks still take a big slice of the revenue. Now, the people funding the bank loans are directly competing for your loan, so the big slice out of the middle goes away.
Loan rates will decline. Interest to lenders will increase. Banks will lose big time as this catches on.
Among the next industries to be disintermediated: insurance.
Posted in: Business Models Companies to Watch
February 14th, 2006 at 20:26 PM
Prosper is a great service and will be fun to play around with. I bet that you will see people with A+ credit ratings playing the float. Meaning that they will borrow for a low interest rate and then lend out for a higher interest rate.
I think that the real estate market is one of the next to go through "disintermediation".
Ryan
February 14th, 2006 at 23:34 PM
I have actually seen insurance go the other way of late. Some companies are charging people to listen to their spiel and then charging for a consultation before they even sell the life insurance.
But, people pay it because they see the value of it. Same goes for real estate. Some folks could care less about a 6 percent comm. on the house if they don't have to deal with it. If they tie the commission into the price of the house, they can probably pull that off the capital gains tax anyway.
On the other hand, people keep talking about real estate prices dropping, but they are also applying that thought to the entire U.S. market. This is a mistake. If you talk to agents they will tell you that people are selling on the coasts and buying here. Park City has tripled its dollar volume real estate sales in the last three years due to attention from the Olympics.
February 15th, 2006 at 15:28 PM
[...] Paul Allen predicts insurance will be one of the next industries to be disintermediated. Ryan Money predicts real estate. I guess they could place a long bet on it. [...]
February 15th, 2006 at 22:55 PM
I wish they would use this concept in allowing micro-investors to participate in funding new business start-ups. I suppose there would be huge securities issues involved.
Here is a service that comes close to accomplishing it... www.fundable.org
March 7th, 2006 at 08:38 AM
Hi Paul:
Megan here from Zopa's US team. It's great to hear you were excited about Zopa's UK launch in March รข
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