David Prosser reports in Forbes on alternative finance’s impressive 2015 figures. David, who profiled Money&Co.’s CEO, Nicola Horlick last year, has had sight of the first of five reports being published by the Cambridge Judge Business School. Crowdfundinsider has also got wind of the figures. An extended excerpt from the Forbes article is reproduced here.
“Another year, another impressive leap forward for the UK’s alternative finance sector. It grew by 84 per cent during 2015, new research published today reveals, with loans, donations and investments funded by the industry reaching £3.2bn last year.
“The study is jointly published by the Cambridge Centre for Alternative Finance and Nesta, the innovation charity, and represents the most authoritative review of the progress made by the UK’s rapidly maturing alternative finance sector. This is an industry that ‘recorded substantive expansion across almost all models’, the report concludes.
“The fastest growing of these models, albeit from a low base, is donation-based crowdfunding, which saw a 500 per cent increase in the amount raised last year, to £12m. But less niche areas are growing rapidly too. Equity-based crowdfunding, for example, raised £332m during 2015, a 295 per cent increase on the previous year.
“Still, the alternative finance market remains dominated by the peer-to-peer lending platforms – both to consumers and to businesses – which are more mature business models. This is one reason why the sector’s total growth did slow last year – that 84 per cent acceleration compares to a growth rate of 161 per cent over the course of 2014.
“Nevertheless, the continuing development of alternative finance is giving the industry increasing influence. For example, more than 3 per cent of all lending to small and medium-sized enterprises in the UK last year came from one of the sector’s platforms – amongst the smallest businesses, with turnover of less than £1m a year, this figure rises to 13 per cent.
“The industry is also attracting increasing interest from institutional investors, which have launched funds in order to capitalise on the sector’s platforms, or invested direct. The Cambridge Centre for Alternative Finance and Nesta said 32 per cent of loans to consumers were funded by institutional investors last year, while 26 per cent of business lending came from this source.”
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