Crowdfunding Comparisons: On Risks, Rewards – And Fruit Salads

Fruit Salad

We often talk about how the young industry of crowdfunding is trying to find stability, certainty and identity. Even the names describing what we do are unstable (for the record, at Money&Co. we are a peer-to-peer [P2P] business lender, lending to small and medium-sized enterprises [SMEs]). See our opinion a while back: “What’s in a name?”

Given that even the nomenclature is fluid, it’s hardly surprising that the data – otherwise known as track record – is pretty patchy and often downright unreliable.

That makes the difficulty of making proper comparisons between crowfunders, be they equity or P2P platforms, very difficult.


Ryan Weeks, editor of AltFi, is a consistent and authoritative voice in the crowdfunding sphere. Here he writes with fine insight on the tough times faced by aggregators as they try to find a fair and accurate basis for pricing equity and P2P assets across the platforms in the marketplace.

“There are plenty of barriers to aggregation in marketplace lending. Perhaps the most insurmountable of those is that the platforms themselves are broadly opposed to the idea of reintermediation. The value of peer-to-peer (true peer-to-peer, I should say) lies primarily in connectivity. Investors are plugged directly into borrowers via a digital intermediary, and generally speaking have clarity over who those borrowers are. There are a large number of ‘P2P’ models that do not fit this definition, but let’s stick to “pure” peer-to-peer lending for now. The point is that reintermediation comes at a price, and it’s a price that the platforms are generally reticent to bring to bear upon their customers.

“But for investment aggregators/supermarkets/portals (whatever you want to call them), there is perhaps a bigger challenge. There are a large number of one-stop-shop solutions for marketplace lending in the UK and indeed globally – each of them similarly nascent, each of them vying to become the go-to for retail and/or institutional investors in the space.

“The problem that these sorts of companies must overcome in order to succeed relates to the sheer variety of underlying assets involved in marketplace lending. There are platforms for consumer loans, platforms for secured and unsecured SME loans, for development loans, for buy-to-let mortgages, for unpaid invoices, and so on. “Comparing risk and reward across so broad a spectrum is like trying to compare the quality of the component parts of a fruit salad. Further complicating the concoction is the enormous variation between the platforms themselves in risk appetite, credit processes, average term, debt collection procedures, etc.

‘The ability to compare assets across platforms continues to elude us’

“How can we be sure, in so complicated a web of instruments, that a Funding Circle “B” loan, for example, looks anything at all like a Funding Knight “B” loan. We can’t. There is little to no alignment between the credit processes of the many different platforms. As such, it’s immensely difficult for access portals to price marketplace lending assets – and, therefore, to funnel investor money into those assets. 

“In the bond markets, investment instruments are compared to one another on a like-for-like basis. For now, no such comparison can take place within the world of P2P. The incomparability of assets is one part of the problem. The other is the lack of an established benchmark for performance. That is not to say, however, that there are no contenders – see, for example, the Liberum AltFi Returns Index (LARI) – rather that the race for “de facto” status is still on. The LARI is, to my knowledge, the only loss-adjusted representation of the historic return delivered by the UK peer-to-peer lending sector’s leading platforms. Were the LARI to become the go-to point of comparison for peer-to-peer lenders – as arguably it should – then we’ve solved the benchmarking part of the problem. But the ability to compare assets across a number of platforms, for the time being, continues to elude us.”


The average return achieved by Money&Co. lenders is over 9.1 per cent. But please be mindful of the risks associated with P2P (see FAQs) as well as the good returns to be had:See here the latest of several articles (links to earlier pieces are embedded in this one).Our lenders have achieved an average gross return of over 9 per cent since we began facilitating loans in April 2014.

SMEs with at least three years’ filed accounts and a strong track record of profitability who are looking to borrow from Money&Co. should click here. Facts and tips about crowdfunding in general are available by reading our knowledge hub, here.

To learn more about getting good returns on capital potential lenders should click here.Remember, when lending your capital is at risk – please read the warnings on our Home, Lend and Frequently Asked Questions pages.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.