UK Alternative Finance Grows by 84% to £3.2 Billion in 2015

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The University of Cambridge Centre for Alternative Finance and Nesta have released their much-anticipated report on alternative forms of finance tracking results for 2015. The research was completed in partnership with KPMG and with the support of CME Group Foundation. Entitled”Pushing Boundaries”, the research is the definitive measure of industry growth across all forms of internet finance including peer to peer lending and crowdfunding.

This is the third year the report has been compiled by Cambridge / Nesta.  The document chronicles the growth, and evolution, of the young sector of finance in the UK but also remains a testament to the potential of internet finance for the rest of the world. The UK has been widely lauded as an innovator in alternative finance arena as the industry has seen assistance from both elected and appointed policy makers.

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Robert Wardrop, Executive Director of Cambridge Centre for Alternative Finance, said the growth of alternative finance was not surprising given the fact the new forms of finance are quickly moving mainstream.

“One of the key drivers underpinning this development is the growing institutionalisation of the sector,” stated Wardrop. “The Cambridge Centre for Alternative Finance is proud to shed light on this fascinating and dynamic industry, to help inform policymakers, regulators and the general public about how these areas of finance are increasingly becoming part of our everyday economic life.”

The authors of the report; Bryan Zhang, Tania Ziegler and Kieran Garvey from Cambridge, along with Peter Baeck and Jonathan Bone from Nesta, have compiled conclusive data that will remain a reference point to the benefit of industry participants, and government officials, for the years to come.  The combined effort saw the participation of 94 alternative finance platforms capturing over 95% of the “visible UK online alternative finance industry”.

Total UK Altfi Finance raised 2013-2015

The positive news for the industry is that it continues to experience impressive growth.  According to the research;

  • Online alternative finance grew 84% to £3.2 billion from £1.74 billion in 2014.
  • SMEs were the biggest beneficiaries as approximately 20,000 raised about £2.2 billion on digital platforms during the year.
  • Total alternative lending hit £1.82 billion or 3.43% of gross national bank’s lending to SMEs. Lending continues as the largest sector by volume.
  • Donations based crowdfunding is growing rapidly- up by 500%. The overall amount remains small though at just £12 million.
  • Equity crowdfunding continues to grow rapidly jumping 295% to £332 million from only £84 million in 2014.  This segment now represents 15% of all UK seed and venture funding.
  • Hottest sector: Real estate. The combination of debt and equity drove this category to £700 million in 2015.
  • Institutional investors are playing a larger role in alternative finance with 32% of consumer lending and 26% of business lending being driven by big money.

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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 1300+ 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 About Us or visit www.ncfacanada.org.

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