Joint Report Shows Alternative Finance Thriving and Growing to Nearly £1b market in 2014

FOR IMMEDIATE RELEASE

Berkeley, California

13 December 2013

Joint Report Shows Alternative Finance Thriving and Growing to Nearly £1b market in 2014

–          Alternative finance intermediaries show 91 per cent year on year funding growth since 2012

–          Alternative finance market predicted to reach £1.6bn in 2014

–          First UK market data on alternative finance, from crowdfunding, peer-to-peer lending and invoice trading, published by Nesta, University of Cambridge and University of California, Berkeley.

£939m has been raised through alternative finance intermediaries* – including crowdfunding, peer-to-peer lending and invoice trading – in 2013, shown in new data published today by Nesta, University of Cambridge and University of California, Berkeley.

The UK’s first figures on the size and growth of the alternative finance market are published today ahead of the Financial Conduct Authority’s consultation on crowdfunding regulation closing next Thursday (19th Dec). The rapid growth of this sector highlights the need to strike a fine balance between protecting investors and enabling the alternative finance industries to expand.

Size-and-Growth-of-UK-Crowdfunding-Industry-600x527 (1)

Today’s data shows that these new ways of finding and securing finance are increasingly popular and fulfilling the potential that many have predicted.

The survey** of UK based alternative finance intermediaries shows:

  1. The UK alternative finance market provided £463m worth of early-stage, growth and working capital to over 5,000 start-ups and SMEs in the UK between 2011-2013.
  2. Equity-based crowdfunding grew by 618% from 2012-2013.
  3. Peer-to-business lending grew by 211% from 2012-2013.

The research team predict that in 2014 the UK alternative finance market will grow to £1.6 billion and provide £840m worth of business finance for start-ups and SMEs.

Julia Groves, Chair of the UK Crowd Funding Association said: “the data proves that our sector is increasingly moving from “alternative finance” to mainstream “modern finance”. Crowdfunding is already providing real value in the provision of desperately needed capital in the engine room of the UK economy. With growing awareness and the advent of a new regulatory framework early next year the future looks extremely bright and the sector is primed to go on and completely replace aspects of retail banking”.

Dr Richard Swart, a researcher on the project and the Director of Research for Innovation in Entrepreneurial and Social Finance at Berkeley explains: “ This intensive study of the UK alternative finance market demonstrates that a light tough regulatory scheme coupled with innovation financing models creates a thriving finance market having real impact on the funding of small enterprises“

Liam Collins, another researcher of the project and policy advisor at Nesta adds: “Both the rapid growth and the diversity of this industry hold significant promise for the UK economy going forward.”

Bryan Zhang, a PhD researcher at the University of Cambridge and a co-author of the report concludes that “This report provides a timely snapshot of the burgeoning UK alternative finance market, which may further our understanding of this dynamic, complex and increasingly important economic sector.”

‘The Rise of Future Finance’ is available to download for free at http://www.funginstitute.berkeley.edu/first-empirical-country-level-study-crowdfunding-uk

 

Notes to editors

For media enquiries please contact Dr. Richard Swart on rswart@berkeley.edu or  at 510 859 3790

  • *The alternative finance market includes: peer-to-peer lending, peer-to-business lending, invoice trading, equity-based crowdfunding, reward-based crowdfunding, debt-securities, revenue/profit sharing, microfinance/community shares.
  • **This was a questionnaire-based survey that captured more than 95 per cent of all UK-based online alternative financing activities such as crowdfunding, peer-to-peer lending and invoice trading. Data was collected from more than 50 alternative finance intermediaries, including almost all members of the United Kingdom Crowdfunding Association (UKCFA) and the Peer-to-Peer Finance Association (P2PFA).

 

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