FDIC Advisory Committee on Economic Inclusion March 28, 2007

2 First Wave (Web 1.0)  What was New?  Streamlined existing processes  Value creation = disintermediation  What was the Same?  Source of value was the company  Company dictated the product  What was New?  Streamlined existing processes  Value creation = disintermediation  What was the Same?  Source of value was the company  Company dictated the product Offline Online Market Books Stocks Loans

3 Second Wave (Web 2.0)  What is New?  Value creation: communication, community, commerce  Source of value is people  Company is servant infrastructure  What is New?  Value creation: communication, community, commerce  Source of value is people  Company is servant infrastructure Web 1.0 Web 2.0 Market Videos Guides Loans

4 Prosper is like an “eBay” for Money  Marketplace for Money  Brings together borrowers with people who have money to lend  Administers lending process including payments and collections  Open access to Consumer Credit Market  Anyone with as little as $50 can lend  Community decides where and why to grant credit  Leverages power of community  Groups, friends and endorsements provide  Vouching benefit  Shame factor

5 Backing  Series A & Series B  $20 million raised  Outside Directors  Jim Breyer, Accel Partners  Wal-Mart, Facebook  Bob Kagle, Benchmark Capital  eBay, E-Loan  Larry Cheng, Fidelity Ventures  Verid Board  Paul Hazen  former CEO Wells Fargo

6 Prosper’s Early Results Users: 235,000 Loans by $: $47,000,000 Borrower Loans: 8,800 Promissory Notes:450,000 Payments to Lenders: 1,200,000 Discussion Posts:260,000

7 High Growth, Good Credit Quality

8 Loan Listings

9 Listing Summary

10 Credit & Employment Data AAABCDEHR

11 Description

12 Group Information

13 Endorsements

14 Questions & Answers

15 Bid History

16 Lender Bidding

17 Estimated ROI

18 Diversified Lender Portfolio

19 Transaction fees BORROWER Closing fees 1% AA - D 2% E - HR Min. $25 LENDER Servicing fees 0.5% AA - A 1% B - HR Per annum BORROWER Failed payment fee $15 First incident per billing period

20 What We Do/ What Community Does  What we do  Perform ID, security, BSA, and bank account validation  Handle loan disclosures and privacy protection  Administer loan servicing and collections  Set Marketplace standards, rules, and etiquette  What community does  Makes credit and pricing decisions  Leverages reputation through groups and endorsements  Introduces and helps new members  Monitors and reports unacceptable behavior

21 Per Loan Economics PrimeNear-PrimeSub-Prime Average Loan$8,000$7,500$3,100 Total Revenue$195$245$150 Origination Expense($13)($18)($42) Servicing Expense($12)($17)($23) Gross Margin$170$210$85 Marketing Expense($100)($90)($65)

22 Returns by Grade AAABCDEHR Net Interest 10.35%12.2%14.3%16.4%19.9%22.0%20.% Net Defaults -0.7%-1.4%-3.4%-4.0%-7.9%-18.7%-27.8% Net Return 9.6%10.8%10.9%12.4%11.9%3.3%-7.0% Prime Near Prime Sub PrimeTotal Net Interest11.4%16.9%21.3%16.5% Net Defaults-1.1%-5.1%-24.0%-8.0% Net Return10.3%11.8%-2.7%8.5%

23 Borrowing Groups

24 Borrowing Groups

25 Group Leader Rewards Match Rewards (Paid by Prosper) 0.5% AA – D 0% E – HR Percentage of loan amount Payment Rewards (Optional, paid by members) 1% AA – A 2% B – D 4% E – HR

26 3 rd Party Applications

27 Research Papers Student Lending Market Opportunity Assessment Prosper Regression Project - Fundability Study Analysis of Interest Rates for Lenders on Prosper.com Case Study – Dec. 2006

28 Prosper in the News

29 Prosper in the Blogs

30 Prosper Community Meet & Greets  New York (cellardoor)  NorCal (BigGulp)  SoCal (DebInVenice)  Atlanta (PolarC)