Category Archives: Marketplace Lending/P2P, Online Lending

Women outperform men in seed crowdfunding, according to analysis by PwC and The Crowdfunding Centre

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PWC | July 11, 2017

New report shows that while more men use seed crowdfunding than women, women are more successful in reaching their finance goals than men in all sectors and geographic regions across the globe.
  • This analysis of over 450,000 seed crowdfunding campaigns from nine of the largest global crowdfunding platforms shows that female-led campaigns were 32% more successful at reaching their funding target than male-led campaigns
  • While men typically seek higher funding targets, female-led projects achieve a greater average pledge amount than male-led projects: on average each individual backer contributes $87 to women and $83 to men (a difference of almost 5%)
  • Even in more male dominated sectors, such as the technology sector, where there are nine male-led campaigns to every one female-led campaign, female-led campaigns are more successful, 13% to 10% respectively
  • The US and the UK are the most thriving countries for seed crowdfunding with the largest volumes of campaigns. In both countries, 20% of male-led campaigns reached their targets compared with 24% and 26% of female-led campaigns respectively
  • However, men continue to use seed crowdfunding substantially more than women and raise substantially more finance than female-led campaigns; 89% of campaigns raising over $1 million were male-led campaigns compared with 11% of female-led
PwC and The Crowdfunding Centre today launched their joint report, Women Unbound: Unleashing female entrepreneurial potential, which explores the experience of women in achieving finance raising success through seed crowdfunding compared with more traditional finance raising routes.
The report findings, which are based on two full years of seed crowdfunding data (2015-16) tracked by The Crowdfunding Centre, include the results of over 465,000 seed crowdfunding campaigns from nine of the largest crowdfunding platforms globally.
The report finds that while men clearly use seed crowdfunding more than women, women are more successful at crowdfunding than men. Seventeen percent of male-led campaigns reach their finance target, compared with 22% of female-led campaigns. Overall campaigns led by women were 32% more successful at reaching their funding target than those led by men across a wide range of sectors, geography, and cultures.
Crowdfunding is a disruptive innovation which has provided new routes to funding for individuals, startups and growing businesses. It enables them to engage and interact directly with the market and with thousands of backers, supporters, customers and potential partners like never before. Seed crowdfunding is the use of ‘rewards based’ crowdfunding platforms to fund the creation, launch or development of new businesses, products, and services where backers pay upfront for a product, service or project. Since its inception, seed crowdfunding's footprint has continued to spread with the levels of finance raised through the nine platforms analysed in this report jumping from $10 million in 2009 to over $767 million in 2016, with backers from over 200 countries.
Women-led campaigns performed better in terms of securing their funding goals than campaigns led by men when we segregate the data for every sector and every country. In countries with the largest volumes of seed crowdfunding, the UK, and the US, 20% of male-led campaigns reached their targets. Yet female-led campaigns outperformed, with 24% of women in the US and 26% of women in the UK successfully reaching their campaign funding target.
This trend continues in countries where seed crowdfunding is not yet as wide-scale or successful. For example, 11% of female-led campaigns in Africa were successful compared with 3% of male. And in E7 countries (China, India, Brazil, Mexico, Russia, Indonesia, and Turkey), 10% of female-led campaigns reached their goals compared to 4% of male-led campaigns.
Even in what some consider to be more masculine sectors, for example, technology, where we see nine male seed crowdfunders for technology ventures to every one female crowdfunder, 13% of women were successful in achieving their funding goal compared to just 10% of men. Similarly, in the digital technology sector, where there are three male-led campaigns to every one female-led, women achieved a 16% success rate compared to just 9% for men.
Media contacts:
The Crowdfunding Centre
PwC
Jamie Veitch
Phone:  +44 (0)7904 272 200
E-mail: press@thecrowdfundingcentre.com
Aoife Flood
Phone: +353 (0)87 2799296
E-mail: aoife.flood@ie.pwc.com
Michelle Rodger
Phone: +44 (0)844 8844 943
E-mail: press@thecrowdfundingcentre.com
Maya Bhatti
Phone: +44 (0) 7808105682
Email: maya.bhatti@uk.pwc.com
About the Crowdfunding Centre
The Crowdfunding Centre is crowdfunding's global observatory, founded by Barry James and his team in 2013 which now provides the world's largest repository of data on crowdfunds harnessed to provide data and evidence based reports and tools for business, government, entrepreneurs, investors, and academia. Find out more and get reports and data for your sector, country or city by visiting TheCrowdfundingCentre.com
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
SOURCE: PWC press room (view release)
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Europe’s alternative finance market hits $9.1 billion in first quarter

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Consultancy.uk | 13 July 2017 

The alternative finance economy for mid-market players across Europe hit $9.1 billion in closed deals across the first quarter of 2017. Deal activity in the relatively new segment hit more than a 1000 accumulative deals this year, with the UK remaining out ahead in terms of closed deals – at almost 400. Fundraising for buyouts remains the driving force for turning to alternative lending platforms.

Attempts at leveraging digital technologies to achieve disruption is spreading into a host of industries, with the lending market no different. The phenomenon of ‘alternative lending’ platforms has grown in recent years, as smaller companies seek to access credit – which is often denied to them in the traditional capital markets – posing real competition to traditional bank funding, which has higher barriers.

In response to demand, marketplace lenders (MPLs) have sprung up – usually as online platforms – which, through a range of new mechanisms, offer an easy means for peer-to-peer lending across a range of segments – with low returns on other forms of assets continuing to entice investors to the market.

A number of prominent new incubators from top consultancies has also seen the sector grow, and the market is being closely monitored by a number of firms looking to tap into the flourishing economy. One of the firms tracking and measuring the rise of the alternative lending market is professional services firm Deloitte. The firm has released a number of surveys of the market, with the latest 'Alternative Lender Deal Tracker' edition involving 59 leading alternative lenders across mainland Europe and the UK in the mid-market segment.

See: The UK government invests £85 million in peer-to-peer lending sector where the watchdog has concerns

 

The study shows that deal activity has increased slightly from the previous quarter, and considerably on the same time last year. Q1 2017 recorded 79 deals, of which around 40% were in the UK, and around a quarter in France and Germany combined. Deal activity in the UK was at similar levels compared to the previous quarter, but considerably up on Q1 2016. Value too saw a considerable increase, hitting $9.1 billion in closed deals, nearly double the value of all of 2016 European fundraising.

European growth

In total around 1011 deals were completed in the past 18 quarters across the burgeoning market, with 612 of those in Europe and 399 in the UK – making the UK by far the largest contributor in terms of activity.

 

 

In the UK the most deals took place in the technology, media & communications segment, at 19% of all deals, followed by the business, infrastructure & professional services segments, at 18%. Human capital represented 6% of deals in the UK, while financial services firms accounted for 10% of closures.

In the rest of Europe, business, infrastructure & professional services mid-markets were the most active in the alternative market, followed by healthcare & life sciences. Technology, media & telecommunications came equal with manufacturing on 14% respectively. Human capital and financial services stood at 2% and 4% respectively.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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How fintech companies are trying to make cryptocurrency investments safer

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The Next Web |By:  | July 18, 2017

Trading in cryptocurrencies like Ethereum, Ripple, and Litecoin can be complicated and not without risk. Fintech companies are offering easier and safer methods.

Remember when cryptocurrencies used to be straightforward, revolutionary and weirdly romantic-capitalist? A bunch of cypherpunks was going to topple the monetary system from a subreddit and everything would be all sunshine and rainbows? It doesn’t seem that fun anymore. There’s infighting, hacks, distrust mixed with a pinch of pure greed.

What happened?

The main thing that happened is that these idealistic cypherpunks met cold capitalism in the form of well funded, hyper-organized cartels that weren’t interested in the culture behind the cryptocurrency movement, but just cold dead profit.

Satoshi Nakamoto had accounted for a lot, but Ukrainian botnets of involuntarily mining computers probably weren’t on his radar when he wrote his manifesto in 2008. Even though cryptocurrencies have lost some of their innocence, there is still a lot to love. Altcoins like Ether, Litecoin, Ripple, Zcash and Monero each have their own special character and strength. And even though the pioneers of the cryptocurrency market still prefer Bitcoin or the classic Ether, everyone with some playing money can find a cryptocoin that’s right for him to invest in.

See: ICOs Going Mainstream? Chat App KIK Launches Token Sale

The mainstreaming of digital money, pioneered by Bitcoin, has made investing in them even more popular. But what most people don’t realize is that when you enter this area you are up against a Chinese whizzkid with his own server park and a supercomputer whose algorithm’s have made 2.5 million decisions by the time you’ve had your morning coffee.

You will lose that fight. Even when you’ve done your homework and religiously read everything there is to read about Bitcoin: when swimming with sharks, chances are you may get bit.

If you want to trade you may as well arm yourself to the teeth. Some of the risks in trading with cryptocurrencies are perfectly avoidable if you use the right tools.

Cryptocurrency exchanges, for example, are not regulated like traditional financial companies are and are less transparent. Buying and storing cryptocurrencies can be a complicated process with a learning curve that requires technical skills. And there’s no guarantee that your exchange won’t get hacked from the in- or outside.

Some of the more well-known exchanges have decent reputations. But remember Mt Gox, the most trusted and biggest BTC exchange in 2014 handling 70 percent of all bitcoin exchanges worldwide? It inexplicably “lost” 850 thousand Bitcoins overnight. Don’t come asking for your money back when things go south: these are unregulated assets.

See also: Fintech Regulation: Achieving the right balance to foster innovation

This is where a service like Exante’s comes in. This European fintech company offers a trading platform that allows access to more than 50 markets and over 45,000 financial products. Starting this week, it offers its clients opportunities to trade in Litecoin and Ripple with Ethereum, Monero and Zcash following next month. Instead of having to buy these currencies directly Exante lets its customers trade in funds that follow the exchange rates of the altcoins directly. An added bonus is that a trading platform makes it easier for you to hedge your bets – in case your cryptocoin crashes like they did over the weekend. With the same account that you use to buy Ethereum, you can also buy tech-stocks on the Nasdaq – just in case you feel the altcoins are getting a little too hot to handle.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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How SMBs can easily accept electronic payments

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Financial Post | By Danny Bradbury | July 10, 2017

Setting up with a credit card processor can be costly and time consuming. There are other options, such as PayPal and Square.

Are you missing a trick by not taking online or mobile payments? PayPal Canada recently surveyed 1,000 Canadian small business owners, and found that more than 80 per cent didn’t accept payments either online or on the go. A little more than 70 per cent said they would never consider selling online. It’s a confusing world, and concerns over paperwork, technology and security worries can be daunting.

Signing up for a credit card merchant account can be difficult enough, involving background checks and legal contracts that can put small businesses off. For several years now, though, fintech companies have been offering alternatives for those wanting to accept credit cards online, or in person, or both.

U.S.-based Square is one example, providing a low-friction option to get up and running with in-store or mobile point of sale solutions. It lets merchants sign up quickly for an account and will sell them a mobile reader that plugs into a mobile device. Canadian merchants can swipe or tap their customers’ cards for a 2.65 per cent transaction fee. Entering digits as part of a cardholder-not-present transaction costs 3.4 per cent plus 15¢.

Those fees may be close to those paid by Canadian merchants dealing directly with credit card processors, who vowed in 2014 to keep their rates at 1.5 per cent for five years. However, merchants are paying Square for easy-onboarding and extra services such as retail analytics, said a spokesperson for the firm.

See: Fintech Regulation: Achieving the right balance to foster innovation

Whereas Square comes from the PoS world, PayPal cut its teeth in online electronic payments, allowing businesses to take payments from credit cards or other PayPal accounts over the internet from customers here or out of the country.

PayPal tried to squeeze into PoS services in Canada before, launching its PayPal Here competitor to Square in 2012. This clearly didn’t catch on, as the firm acknowledges that it doesn’t offer the service north of the border today. Paul Parisi, president of PayPal Canada, says the company is concentrating on ecommerce services for now.

As other payment options gain market traction, PayPal is also working to add value for ecommerce merchants through partnerships with other organizations, including Canada Post.

“Accepting payments online is just one aspect of a what a small business is,” he says. “When you think about how they get their product to the door of their customer, the shipping solutions required to do that in an efficient way are complex for a small business.”

In June, PayPal launched an integrated payment and shipping solution in conjunction with Canada Post. The service allows small businesses selling online to track their orders, print shipping labels automatically, and pay for shipping via their PayPal account.

See: PayPal launches Slack bot for peer-to-peer payments

The system then keeps both seller and customer automatically updated with tracking information and delivery confirmation after the label has been printed.

The biggest advantage for Canadian businesses, though, will be the pricing. If they have a Canada Post Solutions for Small Business account, they will save “up to” 36 per cent on domestic shipments, and 47 per cent on international ones.

PayPal also launched its Return Shipping on Us service in Canada last year, which refunds return shipping costs on eligible online purchases for Canadian businesses.

PayPal may have the branding, but there are other options for businesses wanting to experiment with different payment methods. Interac Online lets Canadian businesses accept payments made via Canadian financial institutions (and also enables in-person debit payments at far lower costs than credit cards), while several fintech firms have made the payments process smoother.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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CFA report: Fintech unlikely to replace traditional sector

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ProfessionalPlanner | By Cut+ Paste | July 12, 2017

The new FinTech 2017: China, Asia and Beyond Report (Report) released by CFA argues that, while FinTech companies were usually strong at technology and applications, they are mostly inexperienced in financial sector operations and therefore unlikely to completely replace the more conventional sectors of the financial services industry.

One of the Report’s authors, Mr Larry Cao, CFA, Director, Content Asia Pacific, CFA Institute, said FinTech firms had a natural growth curve in areas where they were usually part of a system and built smart experiences that banks couldn’t or didn’t want to build.

See: OCC sets stage for FinTech firms to charter as national banks

“First, the most ideal development for FinTech firms is to collaborate with banks; each party has its strengths, and cooperation should be the long-term win–win strategy; second, banks are weak in technological segments like P2P while FinTech’s offer more room for innovative ideas and technological skills but at lower profit margins; and third, FinTech enterprises continue to capture the technological development market because traditionally banks haven’t been eager to develop these kinds of businesses. However, a change in attitude would pose the biggest threat to FinTech enterprises given the banking industry’s sheer scale and resources.”

Mr Cao said discussion had evolved in recent years from simply defining Fintech to more involved narratives about its potential drawbacks.

“While FinTech will have a significant and potentially revolutionary influence on a broad set of sectors within the global financial services, FinTech leaders interviewed for our Report noted that startups needed a large flow of customers, a large amount of data and a very strong credit risk skills to be successful,” he said. “There was consensus the number of startups that would become big peer-to-peer winners was going to be in the tens, not in the hundreds or the thousands”.

Mr Serhan, CFA, President CFA Society Sydney and Managing Director, Research Strategy, Asia-Pacific at Morningstar, said the Report focused on what CFA felt it brought to the FinTech table in terms of expertise and insights, namely a global membership organization of investment management professionals.

“Our global industry network is unparalleled and we add value by facilitating a balanced discussion among the major stakeholders. It will be their collective actions, rather than the action of any individual group, that will determine the FinTech industry’s future and its impact on investors and financial services around the world including Australia.”

Mr Serhan noted the objective of the Report was to focus on areas where innovations are likely to disrupt financial institutions including blockchain, robo-adviser, mobile payment and P2P lending and intentionally limited discussion about artificial intelligence, big data and cyber security.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Why financial services regulation is crucial to fintech

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fscom | by Philip Creed | Jun 30, 2017

Harnessing internet and mobile technologies to create new and superior financial products, FinTech and RegTech firms are uniquely placed to compete with long-established firms and institutions.

Their offerings often far exceed the capabilities of the out-dated services and systems provided by their perennial competitors and can attract tremendous consumer interest.

Yet herein lies the danger.

Whilst innovation, competition and market disruption are always in the interest of the consumer, FinTech and RegTech firms typically explore technologies so new that most regulators struggle to keep up.

In an industry crippled by scepticism and consumer doubt, this is a precarious position for FinTech innovators. A recent survey by Bumberg Capital, a San Francisco-based venture capital firm, found that:

  • 70% of those surveyed believe that ‘new solutions such as digital banking, online lending, payments and financial services, are making financial transactions easier than ever’,
  • 65% of those surveyed agree that ‘FinTech levels the playing field by providing access to services previously only available to the wealthy’, however;
  • 72% of those surveyed ‘listed security as something they worry about with the new banking services online and they are not completely confident their financial information is secure or private’.

The implications are clear. FinTech firms are widely regarded to provide genuine solutions to traditional banking and payment systems, but their public perception is one of vague distrust.

Financial services regulation is crucial to the growth of the FinTech industry.

Not only does regulation protect the end-user from unscrupulous start-ups and innocent failures, but, if done correctly, can foster a truly competitive environment while re-establishing public confidence in the sector and increasing the regulator's understanding of innovative solutions.

The right regulation

The United Kingdom’s Financial Conduct Authority (FCA) is the regulatory body for Great Britain and Northern Ireland, and leads the way in championing a liberal approach to regulation, with a strong focus on promoting both innovation and competition.

The ‘regulatory sandbox’ initiative is part of the FCA’s Project Innovate, and is promoted as a safe space for companies to test propositions that have not previously been offered in the UK.

It allows innovative firms to work with their regulator to trial products in a live environment, promiting effective innovation and competition by allowing FinTech firms to skip the traditional routes to regulatory certainty.

Products are tested in a live, but regulated, environment against real-world rules where, if the product or service fails, there are no consequences for the consumer or the innovator –  in this instance, the FCA provides feedback so the innovator can make the necessary changes, and the product can be tested again.

See:  Competition Bureau suggests Canadian FinTech sector’s slow growth due to regulation, consumer complacency

This is a marked improvement on the status quo – as firms can often lose their market advantage whilst working through a rigorous authorisation process – and has been held up as an example from which regulatory bodies across the world can learn.

Indeed, Singapore, Hong Kong and Australia employ similarly agile regulatory systems. The United States Office of the Controller of the Currency (OCC) recently stated it is moving to establish a framework for ‘responsible innovation’.

The ‘regulatory sandbox’ is a prime example of the effective regulation that FinTechs and RegTechs require, and it’s far better than the alternative.

A dire alternative

Lax regulation would permit a faulty product to enter the marketplace, where it would fail (and early adopters would lose their money), whilst excessive regulation would prohibit the product from ever entering the marketplace (with the potential innovation lost forever).

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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FSB warns of third-party FinTech risk

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Financial Stability Board | Jun 27, 2017

Technology-enabled innovation in financial services, or FinTech, is growing rapidly. As a result, the FSB has been analysing the potential financial stability implications from FinTech with a view toward identifying supervisory and regulatory issues that merit authorities’ attention.

This report identifies 10 areas that merit authorities’ attention, of which three are seen as priorities for international collaboration:

  • managing operational risk from third-party service providers,
  • mitigating cyber risks; and
  • monitoring macrofinancial risks that could emerge as FinTech activities increase.

Addressing these priority areas is seen as essential to supporting authorities’ efforts to safeguard financial stability while fostering more inclusive and sustainable finance.

See:  Competition Bureau suggests Canadian FinTech sector’s slow growth due to regulation, consumer complacency

While there are currently no compelling financial stability risks from emerging FinTech innovations given the relatively small size of the FinTech relative to the financial system, experience shows that they can emerge quickly if left unchecked.

To draw out the supervisory and regulatory issues from a financial stability perspective of FinTech, the FSB developed a framework that defines the scope of FinTech activities to be covered, classified by their primary economic functions; therefore the analysis is technology neutral. Applying the framework to various case studies of FinTech activities helped to draw out the potential benefits and risks from FinTech. Potential benefits identified in the report include decentralisation and increased intermediation by non-financial entities; greater efficiency, transparency, competition and resilience of the financial system; and greater financial inclusion and economic growth. Potential risks include institution-specific micro-financial risks that could emerge and system-wide macro-financial risks for instance increased connectedness and correlation risk. The FSB will continue to monitor and discuss the evolution of the potential financial stability implications of FinTech developments.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

 

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