Friday, June 22, 2007

TechCrunch's bias - Prosper versus Lending Club

I'm a big fan of Michael Arrington's TechCrunch. It's the premier blog about Web 2.0 products and companies. According to Technorati, TechCrunch is the fourth most popular blog on the net. Many new web start-ups can trace their success back to a TechCrunch anouncement.

As I compared TechCrunch's anouncements this week about Facebook's Lending Club and Prosper, it seemed to me that TechCrunch favors Lending Club. Despite being the clear leader in social lending, TechCrunch has only covered Prosper three times in the last 18 months. First when they launched in early 2006, when they anounced milestones last October, and then this week when they raised $20 million in venture captial. Lending Circle received milestone coverage when they reached $100,000 in loans while Prosper didn't receive milestone coverage until they reached $20 million in loans.

In general, Facebook seems to be a TechCrunch darling. When Duncan Riley, one of TechCrunch's writers wrote a post that was somewhat critical of a Facebook feature, Arrington chided him in the comments, "errr, Duncan. This is a pro-Facebook blog. Didn’t you get the memo?"

Prosper could probably be doing more to court TechCrunch. The news about Prosper's $20 million in venture capital was broke by rateladder after Prosper's CEO told a room full of people at Prosper Nights SF. TechCrunch didn't pick it up until hours after a press release the next day. Perhaps giving TechCrunch an early tip about the news would help maximize media coverage.

This couldn't be better - while I was writing the post another Facebook social lending story has hit TechCrunch's front page. This is about ChipIn, a free widget based service that enables users to collect money. From their report:

ChipIn, a free widget based service that enables users to collect money has launched a Facebook application that brings micropayments to Facebook.

ChipIn on Facebook supports existing Facebook events or can be used separately with ChipIn created events. Creation of new “ChipIn’s” is simple, the ChipIn Widget can be customized using photos from a users Facebook account and each ChipIn can also be promoted directly to Facebook friends.

We covered Lending Club, the exclusive Facebook P2P lending service on June 20; ChipIn is at the other end of the spectrum targeting micropayments, yet together they demonstrate the continuing growth of finance on Facebook. There is any number of new Facebook applications being launched daily, and whilst many provide a wow factor and are useful, not that many to date have a real world financial use. It’s not too farfetched to imagine ChipIn being used as a political or charity fundraising tool on Facebook in the near future.

The social lending market is heating up and we are going to see more and more competition against market leader Prosper. The largest market for social lending, in my opinion, is among the web savvy. Prosper would do well to promote their services via the blogging world instead of a press release. Perhaps that is their goal with the referral program?


Jim Stolkin said...

I find the whole P2P lending worlds very exciting! Very few people know about p2p lending and Lending Club's launch on Facebook could actually help Prosper. I have just started lending on both to try them out and there are clear pros and cons of each. I personally like Facebook's one-click approach but Prosper does have more listings.

tom said...

Well, Jim. You've come to the right place. We find it very exciting too. We will continue to cover news about all the peer to peer lending networks and appreciate your insight as you lend on both Lending Club and Prosper.