Interview with Chris Larsen of

Prosper.comNate Ritter (NR): Please introduce yourself and how you got involved with

Chris Larsen (CR): My name is Chris Larsen and I am the co-founder and CEO of We launched Prosper after the sale of E-Loan, which I co-founded and where I served as CEO for 8 years. Leveraging my experience with on-line consumer lending at E-Loan, we set out to create an even more transparent and open lending marketplace that was built entirely by and for consumers. With Prosper, we combined some of the things that worked in traditional American capital markets – liquidity, diversification – with age-old lending concepts from other cultures where personal reputation and community are key. We developed the idea for a people-to-people lending platform that was based on the concept of groups of people borrowing money from their online peers.

NR: What does do?

CR: Prosper is a people-to-people marketplace that connects individuals seeking to borrow money and those interested in lending it. Prosper’s role is to provide a safe and secure marketplace where any person can post a loan listing (as long as they pass strict fraud and ID verifications) and any person with as little as $50 can lend. Because money is flowing directly between people with money and those that need it, rather than through the many intermediaries of the capital markets, borrowers should get more competitive rates while those lending money should receive a higher rate of return. Importantly, we have found that both borrowers and lenders have gravitated to the site not just for more attractive rates but also because of the undeniable social element that binds everyone together. Borrowers are forming groups with their peers to give them more borrowing power while lenders are seeking loans that are rewarding not only financially, but also personally.

NR: How does make money?

CR: Prosper receives a nominal percentage fee from each loan that is successfully funded on Prosper and collects a small annual servicing fee from each lender.

NR: Does a lender receive interest back on their loans?

CR: Yes, lenders bid on loans listings in an interest rate auction for a portion of the requested loan amount. If the loan is successfully funded at that rate, the lender receives monthly repayments from the borrower for principal and interest over the life of the three-year loan. You can view current average interest rates for each credit grade on Prosper by clicking on the “Borrow” tab from the Prosper home page at

NR: When does a lender receive repayment?

CR: Monthly repayments from each loan, including principal and interest, are deposited directly into the lender’s Prosper account.

NR: How many people have been assisted through so far?

CR: Since it’s inception in February of 2006 through today, Prosper has over 85,000 registered users, and 3,800 loans for a total dollar amount of more than $18.2 million.

NR: When did begin?

CR: The company launched in February of 2006.

NR: What are your dreams for the future for

CR: Our goal is to create the de facto marketplace for people-to-people lending that allows borrowers and lenders to trade money safely and efficiently at the best rates possible. An important part of meeting that goal is allowing all the people and communities that participate in Prosper to be able to identify for themselves which aspects of trading money are most important. This means not only traditional measures of risk and return, but also what each participant in the marketplace defines as most important to them.

I want to thank Chris Larsen for taking the time out of his busy day to speak with me. I appreciate his availability and ingenuity in person-to-person lending.

Thanks Chris!

[tags]chris larsen,, interview, lending, microfinance, microlending, micro[/tags]

Nate Ritter lives in the Pacific Northwest (U.S.), popularized the #hashtag and creates web applications for a living. He also does miles and point hacking to enable cheap travel for his family. More here →

7 Comments on "Interview with Chris Larsen of"

  1. If you want to read more information and experiences either from borrower or lender side, be sure to check the official forum at

  2. nate says:

    Thanks for the link, um, “Prosper Loan Stats”.

  3. Kevin says:

    I wasn’t happy with the current blog coverage from an in depth lending perspective… so I started my own.

    My site explores all aspects of lending on using personal experiences as examples while adding rigor to my own journey. Always looking to improve return on investment and reduce risk.

  4. nate says:

    Hmm…. I think this post is getting quite spammy remarks… not happy about that.

    If you have something to say that contributes solidly to this conversation, fine. But, one more like the above, and I’ll be shutting down comments on this post.

    Come on folks, at least ACT like you’ve read the post.

    I edited the above post to filter out the spamminess. If someone cares what site it was for, feel free to ask, and I’ll add it back in (or if Kevin remembers this post, he can add it back in).

  5. Good interview Nate, I am not clear when it took place but it looks like 2006? Having been in the credit field for some time, I was keeping my eye on Zopa to launch in the US but it looks like Prosper got here first. Things are really on a roll for Prosper, and it will be interesting to see what happens as the credit crunch heats up (which I am confident is just beginning.) It may make it even more popular as folks look for alternatives to traditional loans.

  6. Dan says:

    First, I have a basic economic thought: I believe as a diversification tool and risk-free rate of return investment (if spreading out your loans thinly enough, you can achieve the avg loan rate net of defaults as posted at prosper) of 9%+, smart investors will pile in within the next year or two driving up demand for loans (and hence agressively decreasing the average interest rate since lender supply outstrips borrower demand). Therefore, I’m investigating and loading up on 3-year lockins now. Anyone else feel this way? Here is the latest on my experience:

    I’ve been using prosper for a few months now and I’m quite pleased with the results. I have over 20 loans out with an avg rate of over 13%. All loans that have existed for a few weeks are current with their payments. I’ve posted on top groups and strategies for those interested at my blog. There are groups to avoid and strategies to employ to weed out the bad apples. Good luck!

  7. nate says:

    Thanks for the comment Dan. It seems like an interesting strategy. Probably better than playing the stock market, I hope. But, the risk just seems a bit too high for my money. We’ll see where it goes though.

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