The P2P and crowdfunding industry was worth £3.2bn in 2015, according to the new University of Cambridge and Nesta report published this week. That sounds good, but what does it actually mean? We’ve done the hard work for you and pulled out the top five things from the report.
- Equity crowdfunding underwent a 295% increase on the £84m raised in 2014, to £245m (excluding property) in 2015
- P2P lending accounted for the equivalent of 13% of all SME loans
- 25% of all P2P loans last year were actually backed by banks
- Over one million people lent, invested or donated money in 2016
- 250,000 people or businesses were in receipt of funding as a result of crowdfunding
Slowdown in the market?
Yet despite the huge growth in volume, there are many reports in the media highlighting the slowing down of annual growth, with the year on year growth rate for 2013 to 2014 being at 161%. Last year the growth rate stood at only 84%. Don’t forget however that the industry in 2013 was worth a mere £666 million. It is now worth £3.2 billion. Let’s not kid ourselves, this still represents huge growth and is yet another reason to argue that the alternative finance sector is going mainstream. The slowdown in growth is also perhaps down to the saturation of the market within London, and shows that the alternative finance market now needs to target and educate people outside of the big smoke. Even if the growth rate slows down to around the 50% mark in 2016, the sector will sail through the £5 billion mark in 2016.
The rise of institutional lending
Although still some way of from US levels of institutional lending, with Lending Club reportedly sourcing over 50% of their capital this way, the UK is clearly catching up. According to the research, 32% of P2P lending to consumers, and 26% to businesses, was funded through institutional money. The question is: what happens when this well of money dries up. After all institutional money can be notoriously flighty.
The rise in importance of alternative finance to SMEs
The sector now accounts for 15.6% of all UK seed & venture stage equity investing. Back in 2011 crowdfunding accounted for just 0.3%. This shows just how important the sector is becoming to the growth of the British economy.
Dom Wolf is a co-founder at investUP a platform that provides access to 20 crowdfunding sites in one. investUP is authorised & regulated by the FCA. Dom specializes in marketing branding, communications, user behavioural analysis, and business development.