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Updated on Thursday, September 24, 2015
Update 3/15/16 – BillGuard is now known as Prosper Daily
BillGuard, a personal finance app that helps users protect against fraud, announced today that it is being acquired by Prosper for $30 million and an undisclosed amount of stock. Prosper is a leading marketplace lender that originates close to $1 billion of personal loans every quarter.
Prosper is making the acquisition for several reasons. The primary reason is that Prosper will have a database of 1.3 million users to target for a loan. Acquisition costs for marketplace lenders have been increasing, and having a proprietary database could be extremely valuable. Other lenders have made similar acquisitions in the past. Avant, a rapidly growing marketplace lender, purchased ReadyForZero to have access to its database of customers.
In addition to customer acquisition, Prosper is also making a talent acquisition. BillGuard is a slick app that has won awards, and Prosper has yet to create an app for its customers. Most marketplace lenders fight hard to originate a single loan, but have limited ways of remaining relevant in the financial lives of their customers. With this acquisition, Prosper will be better able to create a leading app and enhance user engagement.
For BillGuard, the decision to sell seems obvious. The business has raised $16.5 million across three rounds. Although the valuation of BillGuard has not been disclosed, the investors and founders will be able to receive a meaningful cash infusion while still participating in the upside of Prosper, one of the tech unicorns.
BillGuard: From Recurring Transactions To Identity Theft Protection
BillGuard was initially launched by Yaron Samid to deal with the problem of recurring transactions. Americans regularly sign up for products with recurring monthly billing, from gym memberships to magazine subscriptions. We often forget about them, and don’t pay attention to the charges. BillGuard launched to much fanfare when it revealed Americans lose $14.3 billion every year to “grey” charges, or recurring transactions that we ignore. The initial goal of the app was to help people identify these charges so that they can eliminate unwanted costs and save money.
Over time, the app expanded. BillGuard partnered with Experian to create a suite of credit monitoring and identity theft products. For an annual payment of $83.88, users can subscribe to BillGuard Ultimate. It provides your TransUnion score monthly, daily monitoring of all three credit bureaus, theft resolution services and $1 million of insurance in case of theft. The same product, offered by Experian, costs $15.95 per month.
Identity theft continues to generate headlines and fear in America. The Target and Home Depot breach put the risk on the front page of newspapers across the country. BillGuard has capitalized on that growing fear. The app is not just a “me-too” copy of other identity theft products. First, it is mobile only, so it appeals to a different audience. Second, it leverages the mobile phone to create some unique fraud protection services. For example, BillGuard uses your phone to understand where you are located. It then flags potentially fraudulent transactions based upon your location. For example, if your phone is in New York and there is a charge at a grocery store in Florida, the service would trigger an alert.
Most credit and identity theft products do not feel very sophisticated. The products tend to be high margin, and are sold aggressively by lead generation companies. BillGuard has done a good job of feeling very different. The sign-up process is slick, and you can even pay with ApplePay. The user experience is easy to navigate. The app feels modern, and the solutions created by the credit bureaus and small identity theft companies feel ancient in comparison.