Alternative Financing in the UK goes Mainstream

Anthony Coundouris manages global partnerships at ApexPeak. He is a consummate writer and speaker on the subject of supply chain finance and receivable purchases.

 

Over the last ten years he has been an entrepreneur, co-founding Futurebooks, a firm providing professional services to tech startups in Asia.

By Anthony Coundouris 

 

Alternative finance in the UK can no longer be described as alternative. It has gone mainstream. Almost 60 per cent of small business owners are aware of the existence of alternative financing1.

 

 

There are nine distinct categories including P2P business lending, invoice trading and equity-based crowdfunding. It is considered to be one the UK's fastest growing industry. According to a report by Grand Thornton, P2P lending platforms are the ‘largest forms of modern finance in the UK’ and ‘doubling in size every year’2.

 

In the UK the size of the alternative finance market hit £1.74 billion in 2014, with invoice trading contributing approximately 15%1. The alternative finance market is projected to grow to around £4.4 billion in 2015, if current growth remains buoyant.

 

 

The Nesta report found in 20141:

  • Peer-to-peer business lending up by 250% to £750 million ;
  • Equity crowdfunding is up 410%; and
  • Invoice trading deal volumes up by 174%.

 

The deal flow is large enough to justify an aggregator for institutional investors. Called Startup Crowdfunding, the online platform has created a dashboard that makes it easier to make serious investment decisions.

 

The British Government are taking a close look at how to stimulate the industry further by giving tax breaks to investors by permitting tax-free saving accounts.

 

  1. Nesta. Understanding Alternative Finance, The UK Alternative Finance Industry Report 2014.  http://www.nesta.org.uk/publications/understanding-alternative-finance-uk-alternative-finance-industry-report-2014
  2. Grant Thornton. Alternative Lending: A regulatory approach to Peer-to-Peer lending, 2014. http://www.grant-thornton.co.uk/Documents/financial-services/Alternative-Lending-regulatory-approach-to-Peer-to-Peer-lending.pdf
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