|Money continues to pour into the sector, though at lower valuations. LendingClub still has a valuation of $2.1 billion.|
Fintech lender Prosper's valuation dives 70% in latest funding round
Riley McDermid Digital Producer
San Francisco Business Times
Aug 4, 2017, 11:50am PDT
San Francisco fintech Prosper is about to close on $50 million in funding, in a round that slashes its value 70 percent to $550 million, The Information reports .
That a steep decrease from the $1.9 billion valuation the second-largest online lender saw just last year. The Information reports people close to the matter as saying the company's new investor is Chinese and that although Prosper is struggling, it's attempting to get back onto a path toward financial stability.
"A sharp drop in the valuation of Prosper has nearly wiped out the value of the online lender’s common stock," the Information reports. "The company’s problems reflect the continuing struggles in the industry, as wary investors pull back from the platforms."\
Prosper is similar to most other online lenders because it makes money by taking a fee from lenders looking for access and then a percentage of each loan made. But the increasing scarcity of buyers and increasing pressure on the fintech space have had it scrambling for new ways to stay viable.
"Prosper in particular was reliant on a small number of large buyers such as BlackRock (NYSE: BLK). As one investor began backing out the rest followed, and the company’s revenue dropped," the Information reports. "Prosper’s revenue went from $204 million in 2015 to $136 million in 2016."
The company has also been downsizing as it looks for places to trim the fat, including closing an office in Salt Lake City earlier this year and laying off 30 percent of its employees.