Prosper to Cut Jobs

Prosper is cutting loose 28% of its workforce.

Marketplace lender Prosper is planning to shrink the size of its operation on multiple fronts, according to the Wall Street Journal. A person with knowledge of the plans told the Wall Street Journal that the platform will be shutting down an office in Utah and cutting staff in its San Francisco and Phoenix offices. The cuts are said to affect a total of 171 people.

Prosper CEO Aaron Vermut will forego his salary for 2016. Mr. Vermut emailed the Wall Street Journal with the following statement:

“Over the past year we invested for growth, but with the recent tightening of the capital markets we are refocusing on our core consumer loans business and building more resiliency into the company. The Prosper loan portfolio continues to perform and meet investor expectations.”

The job cuts are said to affect personnel in sales, business development, human resources and recruitment. The Utah office had been dedicated to facilitating loans for medical procedures. Prosper will continue to offer loans for elective surgery via partnerships with doctors, but borrowers for such procedures will henceforth be directed towards the platform’s core consumer loan product. This approach replaces a model in which loans were paid directly to doctors. Prosper acquired American HealthCare Lending for $21m in January 2015 in order to open up point-of-service financing options for medical procedures.

The news of Prosper’s retrenchment comes amidst significant headwinds for the US marketplace lending sector. OnDeck’s quarterly results – which were published yesterday – showed investor demand for the platform’s loans to be cooling. These results precipitated a 36% slide in the company’s share price. Prosper’s planned cutbacks seem to come in response to a slow-down in origination volume, based on coverage from the Wall Street Journal and Bloomberg. Citigroup recently announced that it would no longer purchase loans from the Prosper platform for the purpose of securitisation. The bank's decision came in the wake of a poorly received bond offering that was backed by Prosper loans.

At LendIt USA in 2015 in New York, the likes of Lending Club and Prosper talked – almost competitively – of hiring over ten people a week. Today’s news is indicative of the growing pains that have surfaced since.