Prosper.com, a popular peer-to-peer lending marketplace in the U.S., has received a $1 million infusion from Nigel Morris, co-founder of Capital One, via his venture capital firm QED Investors. This brings the company’s total funding to over $41 million from Accel Partners, DAG Ventures, Fidelity Ventures and Benchmark Capital, among other investors.

Prosper pioneered the idea of concept of people-to-people lending in the U.S with its launch in 2006. Unfortunately, the startup hit a rough patch last year when the SEC stopped all lending on the platform because the company didn’t register as a seller of securities. With the new climate of heightened regulatory oversight in light of the financial meltdown, the SEC is being more judicious about overseeing financial institutions.

The startup was able to re-launch its site over the summer after the SEC gave Prosper the OK to facilitate peer-to-peer lending. Prosper became the first and thus only Internet auction-based P2P loans platform to have its registration statement declared effective by the SEC. Prosper is currently available for lenders in California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Minnesota, Missouri, Montana, Nevada, New Hampshire, New York, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin and Wyoming.

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TechCrunch 50 startup Sprowtt has a radical, yet potentially compelling idea launching today—the startup lets ordinary startups and small businesses conduct a “Sprowtt IPO,” which is basically similar to the traditional IPO process.

Via Sprowtt, anyone can participate in the funding of companies. Potential investors log on to the site, set up a profile with detailed financial and bank account information. Then they are given a list of companies they can invest in based on their financial capabilities. Investors can check out videos of startups, the amount of money the startup has already raised, and their products and see detailed business plans, on which investors can share their comments. Potential investors can also access the offering circulars and shareholder agreements for the startup.

Once an investor decides to put money into a company, he signs the stock subscription agreement, enters the number of shares he wishes to purchase and then the funds are held in escrow until the offering is complete, which happens when the minimum amount for an offering is accumulated. Sprowtt helps to transfer the funds from an investor’s account to the startup.

The Sprowtt platform automates the entire stock offering process, including legal compliance in all states and with the SEC and draws up all of the legal documents (i.e. the shareholder agreement, offering circular) for the startups participating in the marketplace. But it’s not cheap for a startup to do this—Sprowtt says that if a company wants to sell $5 million worth of stock, it will cost them roughly $10,000-$25,000 in compliance fees to IPO.

When there are enough investors for a startup’s IPO, Sprowtt forms a company with these investors, and then invests the chunk of money as an entity instead of as individual investments . Also in the traditional IPO process, a company’s shares go on an exchange, like the Nasdaq, where they can be bought or sold. With Sprowtt’s IPO, there is no exchange, so it’s more of a private investment than an actual IPO.

Expert Panel Q&A (paraphrased)

The experts: Satish Dharmaraj, Lior Zorea, Bradley Horowitz, Tim O’Reilly, Kevin Rose

BH: These companies are all subject to the same restrictions in any other marketplace?

A: We’ve consulted with law firms, they crafted business model, everything is dealt with SEC and Federal government. It’s complex.

BH: Do you vet companies?

A: Yes, we do.

TO: I’m confused. This doesn’t change stock and compliance. Once you are public, you incur those costs.

A: The automation helps with this.

TO: Read Eric Ries’ blog to vet businesses.

SD: When someone buys shares, do they get dividends.

A: It’s all freely tradeable stock. Sort of an alternate to Nasdaq.

KR: How do you plan on attracted companies that aren’t oversubscribed?

A: It’s a big question for us-how to we keep best deals there. But this is a compelling model.

Jason: Which law firm has vetted this?

A: Working with legal counsel. We have had legal counsel in Silicon Valley that has a presence in DC with the SEC. There are things that the law firm will put their stamp on and some that they don’t.

LZ: I think IPOs are on their way back. It’s an interesting idea that other folks have looked at it. Based on my practice, I’m skeptical of this. Securities laws were put in place to protect the folks that didn’t have the means to lose their investments. There are difficult challenges in the securities side.

Video:

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The Securities and Exchange Commission is now greenlighting Prosper to facilitate peer-to-peer lending in 14 states with more on the way, borrowing nearly nationwide. Prosper is now the first and thus only Internet auction-based P2P loans platform to have its registration statement declared effective by the SEC, which is evidently good news for other players in the P2P lending industry, such as Lending Club.

SEC’s approval of Prosper’s secondary marketplace, which enables people to loan money directly to other individual and institutional investors, comes a couple of months after the startup had already reignited its lending platform in the State of California (update: and apparently had to suspend it again a few days after).

Chris Larsen, CEO and co-founder of Prosper, is happy the dry period is over:

“With the financial system in crisis, P2P lending – Americans investing in fellow Americans and small businesses – is needed now more than ever. It has been extremely frustrating to be on the sidelines in the teeth of a credit crunch.”

Starting today, Prosper is available to lenders in California, Colorado, Delaware, Georgia, Illinois, Minnesota, Montana, Nevada, New York, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming. Borrowing is permitted in the District of Columbia and all states except Iowa, Kansas, Maine, and North Dakota.

Prosper has raised approx. $40 million in capital to date from Accel Partners, DAG Ventures, Fidelity Ventures and Benchmark Capital, among other investors. The company was the first to introduce the concept of people-to-people lending in the U.S. when it launched in 2006. From the time the startup officially launched up until the time it entered an SEC registration quiet period in October 2008, Prosper claims to have grown to more than 800,000 members, facilitating approximately $180 million in personal loans.

Prosper has now enhanced its auction model to include a so-called hard bid floor for each listing, which helps lenders appropriately price for risk while investing online. The bid floor for each listing is calculated by adding the national average certificate of deposit rate that matches the term of the borrower loan to the minimum estimated loss rate assigned to each listing. In addition, Prosper has lowered its minimum bid requirement to $25 (previously $50), which should make it easier for lenders to diversify, particularly smaller ones.

More details are available on the Prosper blog.

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The financial crisis has made a lasting impact on small businesses around the world and here at home in the United States. With the credit crunch creating a virtual standstill of lending, small businesses in the U.S. are facing an uphill battle to find funds, especially if their financial history isn’t stellar. Kiva.org, one of the web’s most interesting innovators in the micro-lending space, is hoping to come to the aid of U.S. entrepreneurs and small businesses by launching a pilot expansion that would allow individuals anywhere to make small loans to low-income U.S. entrepreneurs through Kiva’s platform.

Kiva is a peer-to-peer lending site that facilitates micropayment loans between citizen lenders and extremely low-income entrepreneurs in developing countries. Through Kiva’s platform, anyone can loan $25 or more to support an entrepreneur and the specific progress of the loan can be tracked from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds from Kiva or lend again to another entrepreneur, thereby continuing the lending cycle.

In April alone, Kiva members loaned $4.5 million to entrepreneurs, a 56 percent year-over-year increase and a record month for Kiva. Since the microfinance platform’s birth in 2005, over $75 million has been loaned through Kiva.org to support more than 180,000 individuals from 44 developing countries. Kiva’s president, Premal Shah, says this new initiative to include U.S. businesses increasingly made sense as the financial markets deteriorated and traditional lending began to dry up even in the U.S.

According to Kiva, small businesses represent more than 87 percent of all businesses in the United States, and, on average, these micro-enterprises are responsible for 900,000 new jobs created per year according to the Association for Enterprise Opportunity. This number seems small to me but the impact of small businesses on job creation is clear. To make matters worse, Kiva says more than 10 million business owners faced difficulty obtaining capital—even before the credit crisis and economic slowdown.

Kiva will launch today with the ability to for anyone to make loans to 45 small businesses and entrepreneurs seeking funding from the areas of New York, San Francisco, Boston, Atlanta and Miami. The businesses range in purpose and services, from salons to landscaping to day care facilities. For example, a Queens, NY-based entrepreneur delivers baked goods to bodegas in New York. He is looking to raise $6000 to fund insulation technology for his trucks.

Shah tells us that the idea was first introduced by California’s first lady and journalist, Maria Shriver, when she visited Kiva’s office last year. She asked if Kiva’s model could be replicated domestically to support low-income entrepreneurs in the United States. Shah said that initially he wasn’t sure if lending within the U.S. fit into Kiva’s model of international development. But following the recession, the organization realized the opportunity and need to provide community driven, low-cost capital for the everyday small business owner in the U.S.

Traditionally, Kiva uses partner microfinance programs, called a “Field Partners,” to evaluate whether businesses and entrepreneurs are eligible for Kiva’s platform. Field partners looks at a variety of factors in businesses, including past loan history, village or group reputation, and feasibility of business idea and then facilitates the loan transactions between Kiva and the microenterprise. In the US, Kiva will be partnering with ACCION USA, microfinance institution that lends to 48 states across the U.S., and Opportunity Fund, a community development financial institution based in San Jose, CA.

But P2P lending to U.S. businesses has proven to be controversial in the past. Prosper, a US peer-to-peer lender stopped all new lending on its site because of scrutiny by the SEC. Prosper, which is currently back online, agreed to register under the Securities Act, a process which took months. Since Prosper is a seller of investment, the organization had to be registered with the SEC, according to securities laws in the U.S. Loanio and Lending Club also faced similar problems in P2P lending initiatives.

Shah says that Kiva differs from P2P lending sites like with Kiva, you can’t earn a rate of return. The best you can do is get your money back at 0% interest – like lending to a friend. Shah maintains that a key factor for the SEC to determine is whether the organization is offering a ’security’ — where there is an opportunity to earn a rate of return. Since Kiva’s loans to the working poor at 0% interest are clearly charitable in nature, Shah says that registration with the SEC is not required.

One of the compelling parts of the new program is the ability for lenders in other countries to lend entrepreneurs in the U.S., making Kiva the enabler of economic development throughout in both developed and underdeveloped countries. Kiva has also signed up celebs to take part in the new initiative. Apparently, actor Tom Hanks will be lending to a U.S micro business and investor Warren Buffet has been asked to contribute to the new project as well.

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But now Prosper is back despite the fact that the SEC hasn’t yet approved its operations, and while they have respected the requested silence up during the six-month hiatus, they haven’t exactly stalled development of the service. The company relaunched its lending services yesterday for the State of California (borrowing can be done throughout the U.S.), and is hoping to take the whole thing nationwide soon.

There are new features, too. Prosper announced its Open Market initiative, which will allow other financial institutions (e.g. auto lenders, small business lenders and community development lenders) to place their already funded loans the Prosper website for auction. The company will vet lenders and require three payments to have already been made on any loan up for sale.

Prosper has raised $40 million in capital to date from Accel Partners and Benchmark Capital, among others. It’s up against well-funded competitors such as Zopa and Lending Club.

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The company, which started out as a Facebook application for social money lending, hasn’t had it easy so far. In April 2008, it put a hold on lending activities because of regulatory issues, and ultimately filed for SEC registration during the summer of that year. Then the economy collapsed and Lending Club along with other P2P lenders were heavily affected. The SEC suspended loan activities one of Lending Club’s main competitors, Prosper, at the end of last year, citing obvious reasons that these companies should be regulated by the SEC as a securities seller. Another P2P lender, Zopa, hightailed it out of the U.S. market at about the same time.

With some of its main competitors out of the battlefield (but others remaining), the company will no doubt use the new capital to push for dominance in the space. Lending Club says it’s growing quickly, doubling its user base over the past 5 months and handing out returns to users of over 9% net. It also announced a new chief marketing officer, Pamela Kramer, who joins from Etrade, where she held the same position.

If the company manages to weather the storm without too much damage, it will be very interesting to see how social lending evolves in the future – now that banks and other ways of loaning money have lost a lot of credibility across the board – and how vital the role of Lending Club in that story will be.

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Last month, peer-to-peer lender Prosper stopped all new lending on its site because of scrutiny by the SEC. Prosper agreed to register under the Securities Act, a process which can take months.

Yesterday, the SEC issued its formal cease-and-desist letter (embedded below or download PDF), outlining its reasoning for characterizing Prosper as a seller of investment, something prosper had vigorously resisted in the past by arguing that it was merely a marketplace matching lenders and borrowers. But the SEC is having none of that.

And it is not just Prosper, but all P2P lenders, that are on notice. Loanio, a new entrant into the P2P lending arena that just launched last month, has suspended new loans until it registers with the SEC as well (see notice below). And last April, competitor Lending Club was the first P2P lender to temporarily cease operations (the SEC approved its registration, and its members are now lending again in about half the states, including California which gave it the go-ahead last week).

The SEC letter makes clear why it considers Prosper a seller of securities and why it should be regulated by the SEC:

Thus, the Prosper notes are securities under Reves because: (i) Prosper lenders are motivated by an expected return on their funds; (ii) the Prosper loans are offered to the general public; (iii) a reasonable investor would likely expect that the Prosper loans are investments; and (iv) there is no alternate regulatory scheme that reduces the risks to investors presented by the platform.

Even though Prosper is not lending the money itself, the loans would not exist without Prosper. The letter gets into some more detail:

The notes offered by Prosper are investments. Lenders expect a profit on their investments in the form of interest, which is at a rate generally higher than that available from depository accounts at financial institutions. Prosper’s website has included statements that the Prosper notes provide returns superior to those offered by alternative investments such as equity stocks, CDs and money markets.

Lenders rely on the efforts of Prosper because Prosper’s efforts are instrumental to realizing a return on the lenders’ investments. . . . Prosper established and maintains the website platform, without which none of the loan transactions could be effected. Prosper provides mechanisms for attracting lenders and borrowers, facilitating the exchange of information between borrowers and lenders, coordinating bids, and effecting the loans. It provides borrower information to potential lenders via the loan listings, including credit ratings.

. . . Furthermore, under the terms of the notes, Prosper has the sole right to act as loan servicer of the notes. In this capacity, Prosper collects repayments of loans and interest, contacts delinquent borrowers for repayment, and reports loan payments and delinquencies to credit reporting agencies. Prosper also exclusively manages the process of referring delinquent loans to collection agencies for payment, and selling defaulted loans to debt purchasers. Since the lender does not know the borrower’s identity, the lender would be unable in any event to pursue his or her rights as a noteholder in the event of default.

. . . Rather, the Prosper lenders rely on Prosper’s continued operation of the platform in order to transact and to recoup any gain on their investments.

Obviously, any startup hoping to get into P2P lending should read this letter. But this reasoning probably also applies to other investment sites, such as social stock-picking sites, hoping to turn the information on their sites into investment products.

SEC Cease And Desist Order To Prosper – Get more Legal Forms

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Lending Club previously had to do the same thing and suspend new lending last April . (The S.E.C just gave it the green light to start lending again on Tuesday). Zopa shut down it’s P2P lending site in the U.S. last week.

Even before the increased regulatory scrutiny, P2P lending took a massive hit along with the rest of the financial industry. As Brad Stone points out in an excellent piece in the NYT:

Monthly loan volumes at the company have been declining since the credit crisis worsened this spring. Prosper, which is unprofitable after raising $40 million in venture capital, now faces the damaging possibility that lenders may take their money off the site instead of waiting for the S.E.C. to allow lending to resume. That could take several months.

You can see on Lending Stats that Prosper’’s membership growth and the number of active lenders and borrowers took a dive starting last April. And delinquencies for loans more than 18 months old are trending at higher than 30 percent. That is because a large portion of Prosper’s loans are in the sub-prime category. People who couldn’t borrow from a bank, borrowed from their neighbors on Prosper instead.

Now they are temporarily shut down.

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If you are having trouble paying for college, maybe you can hit up your social network for a loan. That’s the idea behind GreenNote, another peer-to-peer lending startup that is launching this week. (The site is still going through load testing, but should be up fully by Wednesday). Prosper, Zopa, and Lending Club (which is under regulatory scrutiny) already offer general P2P loans, but GreenNote is more like Fynanz or China’s QiFang, in that it is focussed only on student loans.

These tend to have lower default rates and there is a rising need for them. The funding gap between the average four-year cost of going to a state college and available federal loans is at least $22,000, according to the company. For private universities, that gap can be more than $100,000. P2P lending startups like GreenNote see that gap as a huge opportunity. In aggregate, there was a $113 billion funding gap in 2007, $95 billion of which was paid for by personal and family funds.

But GreenNote is not about matching high-risk borrowers with lenders who want a higher return. It is about tapping into the altruism of family and friends who want to chip in to help finance the college education of a student they already know. CEO Akash Agarwal says:

This is really getting your social network to help you—asking your social network to step up, and not asking for a hand-out.

The loans are designed to mimic a federal Stafford loan—the interest rate at launch is 6.8 percent. The rate is fixed, payments are deferred for up to five years, and then students have 10 years to pay back the loan. No co-signers are needed, and GreenNote loans are open to non-U.S. citizens.

Lenders can pitch in as little as $100. In that sense, it takes more of a micro-finance approach. GreenNote keeps track of who owes what to whom, takes care of the paperwork, collects the funds, and then distributes the payments after the student graduates and starts paying back the loan. GreenNote takes a 2 percent fee up front from the student out of the principle of the loan, and another 1 percent from the lenders out of the interest. (Fynanz, in contrast, only takes a 1 percent fee).

GreenNote raised $4.2 million in a series A round last October from Menlo Ventures and Glenbrook Partners.

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Prosper is about to get a lot more competition. After more than a year of waiting, UK-based Zopa got the go-ahead from regulators to launch its U.S. Website last week. Zopa, which doesn’t allow sub-prime loans at all, has a 0.1% default rate, whereas Prosper has a 3 percent default rate.

And Lending Club, which started as a Facebook-only application, just got clearance today to operate nationwide. (It had been awaiting approval from half a dozen states, including big ones like California, Michigan, Illinois, and Pennsylvania). Lending Club launched six months ago on Facebook, and opened up its own Website three months ago. In that time, its members have issued 489 loans worth $3.5 million. Of that amount, only $16,000 worth are between 16 and 30 days late on payments (see stats here). It also does not allow sub-prime loans.

Lending Club’s loan portfolio is too small and its loans have been out too short a time to really know what its average default rate will be. But if it can match its larger competitors, it should do fine. Social lending is here to stay.

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Zopa’s peer to peer lending service differs from U.S. rivals by working with credit unions to offer person-to-person loans instead of a loans coming directly from lenders on the service like Prosper and Lending Club (works through Facebook). GlobalFunder.com is a yet-to-launch competitor. With Zopa, lenders will place their money in Zopa branded CDs that are then loaned out online. Borrowers apply for loans through their online community by posting their case for the loan and filling out relevant details about their credit risk. Interest rates on five year loans can range from 8.75% to 16.99%, depending on their credit risk.

It’s worth noting that Zopa’s investor, Benchmark also invested in Prosper. The lending market is anticipated to be very large. According to the research firm Online Banking Report, around $100 million in new P2P loans will be issued this year, mostly by Prosper, with new loans growing to as much as $1 billion in 2010 and $9 billion in 2017. Prosper already registered an S-1 with the SEC and reported $96.4 million in loans.

Adding further details to the launch, Allen Stern received an email outlining some differences between the U.S. and U.K. (which TCUK covered) versions. The key differences listed are:

• No risk for investors.
  Your funds will be federally insured. No more worrying about whether your borrowers will pay your loan back.
• Pick who you want to help.
  Investors will choose exactly who they want to help.
• Set your rate.
  Investors will choose how much they want to earn, up to a ceiling.
• No waiting.
  Borrowers will get their loans immediately upon approval.
• Lower your monthly payment.
  Borrowers can actually reduce their loan payments after they’ve borrowed. They’ll do that using rich profiles…

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Right now, if you loan money to someone on Prosper, you have to wait for the term of the loan to expire to get all of your money and interest back (unless the debt is paid back early). A secondary market would allow individual lenders on Prosper to sell loans to each other right away, and perhaps even package them together. Such a secondary market could make Prosper a more appealing place for larger financial institutions to invest in.

Hints of what Prosper is up to can be found in an S-1 registration the company filed yesterday with the SEC (see press release). The part of the S-1 (which is not yet effective) that caught my eye was this:

The Lender Participant Rights are associated with the $500,000,000 in aggregate principal amount of Notes to which this prospectus relates. This amount represents the aggregate principal amount of Notes that Prosper expects will be originated on the Platform during the one-year period beginning on the date of this prospectus together with the principal amount of Notes that have been originated on the Platform prior to the date of this prospectus.

In plain English, that means that Prosper expects that the cumulative amount of loans on the site a year from now will be worth up to $500 million. That would still be peanuts for most banks, but would represent a fivefold increase from the amount of loans originated on the site so far.

Prosper has raised $40 million from Accel Partners, Benchmark Capital, the Omidyar Network, and Fidelity Ventures.

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Similar to other P2P lending sites (Prosper, Zopa, Kiva), LendingClub matches borrowers and lenders. However, LendingClub doesn’t work through their own website, but solely through Facebook on the application they launched at the F8 platform launch conference. Borrows and lenders a linked up using their “LendingMatch” system, which recommends loans based on credit and their social relationships to each other. The idea being that trusted relationships make lending more likely and defaults less likely. The application currently has over 13,000 installs.

Unlike Prosper, interest rates aren’t determined through bidding, but calculated based on the borrowers credit score, debt to income ratio, and amount of the loan. There are no hidden fees, and the interest rate is fixed for three years. In July the service surpassed $500K in loans. They recently claimed a little more than 4 out of 5 loans get funded and haven’t reported any defaults or late payments.

It’s still the early days for this industry, and as TC commenters point out, it’s very much a case of Caveat Emptor.

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Prosper handles loans of up to $25,000 (the average funded loan is $5,000), broken into smaller loans to distribute risk. Money for the loan is then supplied by Prosper lenders bidding for the most attractive interest rates. Prosper earns revenue by taking 1% of the loan amount in fees from the borrower up front, and charging a 0.5% yearly loan maintenance fee to lenders. Prosper currently has over $79 million in funded loans and more than 380,000 members. So far it appears a lot of those members are logging on to pay off credit card debt at a lower rate. Prosper’s backer, Benchmark, has also invested in another P2P lender, Zopa.

It’s ironic to see these peer to peer lending startups expanding at the same moment the collapse of the sub prime lending market sends waves through the mortgage market. Similarly, these startups will be sink or swim based on their ability to effectively manage risk.

Prosper is managing risk by encouraging transparency, automatically deducting monthly loan payments, and tracking reputations. Borrowing groups are another risk management tool, both helping first time borrowers get some initial credibility (and lower rates) while encouraging the network to police itself by tying together their reputations.

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The round was led by DAG Ventures and Meritech Capital Partners. Existing investors Accel Partners, Benchmark Capital, Fidelity Ventures and Omidyar Network also participated.

Prosper allows members to request loans of up to $25,000 (the average funded loan is $5,000), and then other members offer to fund the loan at various interest rates. Prosper breaks the loan up into multiple pieces to distribute risk, and then funds from the lenders offering the most attractive interest rates.

Prosper says they hav 330,000 users and have funded $70 million in loans. Zopa, a similar company, is headquartered in London.

Previous coverage here.

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They reached both milestones faster than UK-based competitor Zopa, which was recently named a Busines 2.0 “Disruptor.”

Prosper allows members to request loans of up to $25,000 (the average funded loan is $5,000), and then other members offer to fund the loan at various interest rates. Prosper breaks the loan up into multiple pieces to distribute risk, and then funds from the lenders offering the most attractive interest rates. Over 4,000 loans have been funded since the site launched in February 2006. Prosper earns revenue by taking 1% of the loan amount in fees from the borrower up front, and charging a 0.5% yearly loan maintenance fee to lenders.

Interesting fact: Benchmark invested in both Zopa and Prosper, and the two will soon be competeting directly as Zopa expands to the U.S. market.

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Like London-based (and Benchmark funded) Zopa, Prosper is a marketplace for borrowers and lenders.

Individual borrowers say how much they need to borrow (up to $25,000) and the maximum interest rate they will pay. Interested lenders say how much they want to lend, and at what rate. Prosper takes the lowest price lenders and groups them into a loan.

It generally takes 2-4 days to close a loan, according to Prosper. However, a borrower can request an expedited loan, which will take the first lenders who meet the minimum requirements for amount and interest rate.

Prosper charges a number of fees, including a 1% closing fee to the borrower and a 0.5% annual loan maintenance fee for lenders.

Benchmark has funded both Zopa and Prosper. Other Prosper investors include Accel, Fidelity and Omidyar.

Rumors are flying that a super-stealth BenchMark backed company called CircleOne (also known as p2pcredit) will be launching as soon as this weekend. The domain name, www.circleone.com, is not yet live.

If the rumors are correct, the company will be similar to Zopa, a London based company that we profiled in August. Zopa syndicates small loans out to many people, taking a fee..

Whois information on the domain (registered at register.com) shows the company is located in San Francisco.

Something about the rumor must be wrong…Benchmark has also invested in Zopa, which has announced that they will be launching in the U.S. at some point.

Update: An ebay employee has joined circleone and has a profile on LinkedIn (I am not going to point to it). This person describes CircleOne in the profile as follows:

CircleOne is a consumer loan platform through which people can borrow money by setting their own interest rates, like an eBay for personal loans.

CircleOne’s founding principle is that people from close communities act more responsibly towards each other. CircleOne leverages this powerful concept of group responsibility and applies it to person-to-person lending – resulting in better interest rates for people that borrow and lend.