Zopa, the world's first online exchange for person-to-person lending and borrowing, recently announced it has named Phillip J. Riese chairman of Zopa board of directors.

This adds to the $26 million previously raised from Bessemer Venture Partners, Benchmark Capital and Wellington Partners to fund the company's development.

The company already had raised $12 million in its first round in 2004 from Benchmark Capital and Wellington Partners.

The funding comes in part from a personal investment by Silicon Valley venture capitalist Tim Draper, noted for his early role in funding Internet companies such as Skype, Overture.com and Hotmail.

The Rowland Family of the UK also participated in this round of funding. Previously, the family has invested in Internet companies such as Jellyworks and LastMinute.com.

Zopa hopes to follow Skype's model of challenging an entrenched, highly regulated industry, with a simple, cheap Internet-based service, advertised by word-of-mouth marketing. In other words, Zopa wants to do to financial services what Skype did to telecommunications.

"When you get a business that can provide a compelling economic proposition and is marketing through online channels, growth can be incredibly rapid," said Bessemer General Partner Rob Stavis, a Zopa board member who led Skype's first funding round. "Skype went from zero to 50 million users in two years."

"We thought here's a guy who helped Skype go through enormous growth and maybe he can do that with us."

Its first U.S. launch, which will include only California residents initially, is planned for the summer.

"Zopa is proving its value to borrowers and lenders in the UK every day, and we believe this success will catch on around the world," said Riese. "This is an opportunity for me to join an amazing team and help define a new category within financial services."

"Zopa has created a powerful new service in person-to-person lending and borrowing that gives more opportunity and control to the consumer," said Draper. "I see significant growth potential for Zopa."

"Phillip has unparalleled experience in financial services and consumer marketing," said Richard Duvall, CEO, Zopa. "We know his guidance will be invaluable as we continue to progress along our growth path."

"The additional $5 million in funding and the commitment from an individual as accomplished as Phillip Riese reflects the power of our proposition," said Duvall. "These developments put us in a position to move toward our California launch with strong momentum and support."