Prosper Marketplace Inc., one of the largest U.S. online lending platforms, is slashing its workforce 28 percent, joining rivals in signaling investors aren’t as eager to fund loans after years of rapid growth.

The venture is shutting an office in Utah and shrinking its staff in San Francisco and Phoenix, affecting a total of 171 people, according to a person briefed on the matter. Chief Executive Officer Aaron Vermut will forgo his salary this year, said the person, who asked not to be identified because the plans aren’t public.

“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,” Vermut said in an e-mailed statement. “The Prosper loan portfolio continues to perform and meet investor expectations.”

Prosper and its competitors are finding it more difficult to attract funding for the loans they arrange online. In recent weeks, Citigroup Inc. stopped buying debt from Prosper’s platform to package into securities after investors demanded a higher premium on the bonds. On Deck Capital Inc., a platform focusing on loans to small businesses, plunged 34 percent Tuesday after reporting wider losses and cutting its revenue forecast.

Premium Demanded
Prosper helped pioneer so-called peer-to-peer lending, initially matching borrowers with individuals who want to fund them. The business boomed in recent years, luring competitors and more sources of funding -- eventually including Wall Street securities firms, which bundled the debts into bonds. That shift helped fuel more than $36 billion of loans in the U.S. last year.

There are signs that cheap and easy financing may be harder to come by. The average weighted spread for a batch of Prosper loans Citigroup sold in late March almost doubled to roughly 500 basis points, compared with an offering in December -- evidence investors were becoming less enamored with the emerging class of bonds. Prosper and its biggest competitor, LendingClub Corp., have been raising interest rates as buyers of the debt focus on loan quality, particularly to riskier borrowers.

On Monday, On Deck cited poor market conditions as it announced a plan to sell fewer loans to investors on its marketplace and keep more on its balance sheet. The move should bolster earnings starting in 2017, CEO Noah Breslow said. “Especially in this environment, we didn’t want to peg ourselves through a growth rate at all cost,” he said.

Personnel Affected
On Deck’s shares are down 47 percent this year. LendingClub has slumped 36 percent. Prosper is closely held.

Its job cuts will affect personnel in sales, business development, human resources and recruitment, the person briefed on its plan said. The company will retain workers focused on verifying applications, regulatory compliance, risk and underwriting, the person said. It’s also keeping the Prosper Daily app, which helps people track their finances.

The firm separately promoted Brad Pennington to chief risk officer, after his predecessor decided to leave, the person said. The Wall Street Journal reported the cuts earlier Tuesday.

At a conference in April, Prosper President Ron Suber said changing investor sentiment caused his company to learn some lessons this year. “When we don’t have alignment with our investors, when groups sell our loans into the market no matter what, if the market’s not ready, it’s not good,” he said.