The crowdfunding, peer-to-peer lending and invoice trading market will grow to £1.6 billion next year, according to a new market study.
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div>The crowdfunding, peer-to-peer lending and invoice trading market will grow to £1.6 billion next year, according to a new market study.
Data compiled by think-tank Nesta, alongside the Universities of Cambridge and Berkeley, has shown how the amount raised through online marketplaces for alternative finance has nearly doubled over the past year.
According to the report, £939 million was raised in 2013, representing a 91 per cent increase from 2012’s figure of £492 million.
The report cautiously predicate that the UK alternative finance market will grow to £1.6 billion next year and provide £840 million worth of business finance for start-ups and SMEs in 2014.
The UK alternative finance market provided £463 million worth of early-stage, growth and working capital to over 5,000 start-ups and SMEs in the UK from 2011-13, of which £332 million was accumulated in 2013 alone.
Peer-to-business lending grew by 211 percent to £193 million between 2012 and 2013, the report said. Investors got higher interest rates than they would have from high street banks and companies received funding faster.
Alternative finance intermediaries have been growing in size and impact in recent years in the UK as they attempt to provide much needed capital to individuals and businesses.
Nesta policy advisor and one of the report’s authors, Liam Collins, said: "The rapid growth and the diversity of this industry hold significant promise for the UK economy going forward.”
The FCA consultation on tighter rules for crowdfunding and peer-to-peer lending, to protect inexperienced investors, is due to close on December 19th.
The report states: “Primary data gathering was facilitated by a questionnaire–based survey, which was able to capture more than 95 per cent of all UK–based alternative finance activities such as crowdfunding, peer–to–peer lending and invoice trading. Data on more than 50 alternative finance intermediaries was obtained, including from almost all members of the United Kingdom Crowdfunding Association (UKCFA) and the Peer–to–Peer Finance Association (P2PFA).”
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