Market research firm IBISWorld has released a report on the P2P lending industry and there is – as expected – some pretty staggering growth in the space.
The breakdown comes via 54 companies the firm tracks as being active in P2P lending. Since 2008, revenues have grown by 176.6%. 2013 revenues for P2P lending platforms stand at $162 million. That certainly dwarfs revenues in the rewards-based crowdfunding world.
Revenues in 2013 grew 27.6% year-over-year.
The Peer-to-Peer Lending Platforms industry is a new, fast-growing industry that has experienced rapid growth in terms of revenue and enterprises over the past five years. However, regulations from the Securities and Exchange Commission have added some turbulence and uncertainty to the industry. Going forward, profit is expected to rise, but the industry will continue to be characterized by increased regulation and competition.
Consider that even at the most liberal estimates, Kickstarter and Indiegogo combined could have accounted for somewhere in the neighborhood of $1.2 billion in funding. (Kickstarter is hovering around $900 million in funding since inception. Indiegogo doesn’t share numbers but we’ll assume $300 million from them which may be very generous.) Apply a 5.5% success fee (a little over 5%, accounting for 9% flexible funding campaigns from Indiegogo) and revenues for rewards-based crowdfunding platforms since inception could be somewhere in the neighborhood of $70-80 million.
Napkin math, but you get the point… The P2P lending space is really, really big. P2P lending revenues in 2013 alone – $162.2 million – were double any reasonable estimate I can come up with for rewards-based crowdfunding over the past 5 years or so. Companies like Lending Club and Prosper have led the charge on growth in the P2P space.
Because of how new the industry is, lending platform operators have faced significant regulatory challenges, and operators should anticipate continued uncertainty through 2018. Peer-to-peer lending platforms do not fit squarely in one financial category. The industry’s products have been deemed securities, and industry operators therefore follow regulations set by the US Securities and Exchange Commission. However, federal government officials may ultimately decide that the industry is bound by laws governed by the Consumer Financial Protection Bureau instead. Or, regulations in lending and credit could change. Successful operators have and will continue to be nimble in regard to these sometimes costly and time-consuming changes.
