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REAL ESTATE CROWDFUNDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
October 14
AUTHOR
INTRODUCTION
The UK alternative finance sector has
seen unprecedented levels of growth
since the global financial crisis. The sector
ranges from equity crowdfunding, to
peer-to-peer lending, invoice financing,
debt crowdfunding and peer-to-business
lending. These activities supply credit to
other individuals, SMEs, early-stage start-
up companies and entrepreneurs to fund
innovation, create jobs and help stimulate
growth in local and regional economies.
The concept of crowdfunding is central
to the alternative finance market and
comes from the fact that loans or equity
investments are split between a number of
investors - the crowd. Crowdfunding covers
a number of concepts including donation,
reward, equity and debt (lending).
The first successful online crowdfunding
project was in 1997 when British rock
group, Marillion, funded a tour by raising
$60,000 in donations from their fans.
1
The market has seen rapid growth in
recent years and over $5.1bn was raised
through crowdfunding sites globally in
2013.
2
Zopa was the first peer-to-peer lending
platform in the world, established in the
UK in 2005 to facilitate loans to individuals
and more recently small businesses.
3
Zopa aims to enable borrowers to
dramatically cut the rates they pay and
savers to achieve market-leading returns.
Size and growth of the UK Alternative
Finance Market.
4
According to a report by Nesta titled “The
Rise of Future Finance: The UK Alternative
Finance Benchmarking Report”, published
in December 2013, the amount raised
through the UK alternative finance market
grew by 91% from £492m in December
2012 to £939m by the end of 2013. The
market is predicted to be worth £1.6bn
(annually) by the end of 2014.
Between 2011 and the end of 2013 it
provided £463m of early-stage growth
and working capital to over 5,000 start-
ups and SMEs, with £332m of this raised in
2013. The market is (cautiously) predicted
to provide £840m of finance to start-ups
and SMEs in 2014.
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1-
• 2-http://research.crowdsourcing.org/2013cf-crowdfunding-industry-report • 3-http://www.zopa.com/ •
4-Nesta: The Rise of Future Finance • 5-Nesta: The Rise of Future Finance
£1.74
BILLION
2011
2012
2013
309M
492M
75%
AVERAGE
GROWTH
RATE
939M
Peer to Business Lending
Alternative Finance Sector Report - October 2014
Luke Jackson
Samantha Goins
