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MOVING MAINSTREAM
Acknowledgements
Research partners
Media partner
Supporting organisations
Copyright information
All rights reserved. University of Cambridge and
EY 2015. Copyright: the contents of this report are
protected by copyright law.
About EY
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[43]
MOVING MAINSTREAM
Forewords
ntil very recently, crowd and peer-to-peer financing activity was seen by many observers
particularly those within incumbent financial institutions as a tiny niche with little prospect
of ever impacting the broader financial system. Not any more. Our findings in this European
Alternative Finance Benchmarking Report suggest that these new forms of alternative finance are
growing quickly, and this growth is beginning to attract institutional investors. Alternative finance,
at least in some European countries, is on the cusp of becoming mainstream.
Researchers at Cambridge have been studying alternative finance since it emerged as a grass-roots
phenomenon following the recent financial crisis, and have authored and co-authored several of the
most-cited reports about the industry. We firmly believe that alternative platforms can increase access
to finance and thereby improve both social and economic outcomes. We felt it was important to provide
a comprehensive picture of online alternative finance across Europe, and draw attention to the dramatic
variation in how alternative finance is developing across European economies. Hopefully, our findings
will cause industry, governments and academics to debate questions about how and why this is the case.
Robert Wardrop
Executive Director, Cambridge Centre for Alternative Finance,
Cambridge University Judge Business School
lternative finance is a fast-growing area of the financial services sector, but there is little hard
data about the extent of the industry across Europe, so were delighted to be able to support the
work of the University of Cambridge in this field.
One of the most noteworthy aspects of the alternative finance sector is that it showcases innovation, in
terms of both business models and technological platforms. A high proportion of the businesses featured
in this survey operate solely online, with websites that have been designed from the outset with the
needs of the customer in mind. Compare that with traditional financial services firms that are working
hard to redesign their products and processes to meet the demands of the internet age.
Indeed, it will be interesting to see how mainstream financial institutions respond to the growth of
alternative finance providers. Will they simply regard them as competitors albeit relatively small ones
or will they adopt some of the innovations from alternative finance as a way of increasing their own
product offering?
The taxonomy of alternative finance featured in this report identifies nine broad categories of business,
but within these there are many more sub-sectors. Inevitably, there will be winners and losers as the
market develops.
As with any new sector, alternative finance also brings with it new risks. Investors need to understand
the nature of the products, and its important that appropriate controls are put in place. So we welcome
the regulation of the sector which, as this report reveals, is uneven across Europe. While the UK the
market leader by some distance has introduced dedicated regulation for alternative finance providers,
many other countries havent, or are applying existing regulations that were not specifically designed to
cover this kind of activity. The University of Cambridge has asked some commendably straightforward
questions about different countries regulatory frameworks, and the comments from the various industry
organisations make for fascinating reading.
These issues will doubtless be resolved over the coming years, and were excited about what the
alternative finance sector can contribute as part of the broader economy. This study will provide a
valuable benchmark against which to measure future developments.
Andy Baldwin
EMEIA FSO Managing Partner
[3]
Contents
9
Executive summary
10
Introduction: research rationale, objectives and methodology
13
The size and growth of the European alternative finance market
15
The dynamics of the European alternative finance market
17
The diversity of the European alternative finance market
20
The vitality of alternative finance for SMEs in Europe
22
The fundamentals of the European alternative finance market
26
France
28
Germany
30
The Netherlands
32
Spain
34
The Nordic countries
36
United Kingdom
40
Conclusion
42
Endnotes
43
Acknowledgements
[4]
MOVING MAINSTREAM
Special thanks
Ronald Kleverlaan, Karsten Wenzlaff, Dr Rotem Shneor, Daniel Oliver, Sam
Ridler, Marianne Iizuka and Bruce Davis, who contributed greatly to this report
with their A view from the field studies.
Together with Nicolas Lesur, Julia Groves, Christine Farnish, Oliver Gajda,
Tommaso DOnofrio, Claus Lehmann, Alessandro M. Lerro, Karol Krl, Benot
Granger, Bruno Schneider, David Charlet, Benoit Bazzochi, Simon DeaneJohns, Dr Michael Gebert, David Blair, Dominique Stucki, Jonas Dromberg,
Professor Mingfeng Lin, Dr Richard Swart, Ben Gilbert, Dr Kevin Grell, Noora
Laitio, Cormac Leech, Qian Gao, Andrew Dix and Erin Hobey, and through
their respective industry associations and organisations, they made this
benchmarking research possible.
We would particularly like to thank Thomas Bull from EY. We are also very
grateful to Emma Fisher, Tim Turner and Annelise Nelson of Wardour for their
dedication and support in the production of this report.
[5]
[6]
MOVING MAINSTREAM
GREEN
ROCKET
[7]
Samenwerkende Kredietunies
voor ondernemers door ondernemers
[8]
MOVING MAINSTREAM
Executive summary
The European
alternative finance
market grew by
144% last year
[9]
Introduction: research
rationale, objectives
and methodology
A burgeoning industry
Within the alternative finance industry, taking
a narrower definition, online platform-based
alternative financing activities such as donation-,
reward- and equity-based crowdfunding, peerto-peer consumer and business lending, invoice
trading and debt-based securities are burgeoning
in Europe following the global economic downturn.
There are now hundreds (if not thousands) of
online alternative finance platforms in Europe
that are facilitating millions of euros worth
of transactions every day for individuals and
businesses alike.
This new brand of innovative, decentralised
and potentially disruptive alternative finance is
supplying credit to consumers, providing earlystage investments to start-ups and growth capital
to SMEs, stimulating regional economies and
funding worthwhile causes. Crowdfunding and
peer-to-peer lending are becoming financial as
well as cultural buzzwords of today, capturing
[10]
MOVING MAINSTREAM
A pan-European study
In terms of research scope, as a pan-European
benchmarking study, the research was specifically
focused on online alternative finance platforms that
are based in Europe and are facilitating funding for
European individuals and businesses. Leveraging
existing research relationships and extensive
industry contacts, this benchmarking research aimed
to capture 85-90% of all online platform-based
alternative financing transactions in Europe from
equity-, reward- and donation-based crowdfunding,
peer-to-peer consumer
and business lending to
invoice trading, debtbased securities, microfinancing and community
share offerings between
2012 and 2014. In
addition, wherever
necessary and feasible,
the online transactions of
some of the international
platforms that have
significant activity
(i.e. those with over
an estimated 15m
transactions per platform) in Europe were also
included in the scope of the benchmarking research.
To meet the research objectives and ensure
the consistency, rigour and validity of this panEuropean study, the following benchmarking
procedures were carried out by researchers based
at the University of Cambridge from October 2014
to January 2015.
This nascent
industry is
growing swiftly,
evolving rapidly
and starting to
be regulated
Online questionnaire
Specifically designed for the European alternative
finance market, our short online benchmarking
questionnaire was effectively distributed through
our national and regional research partners to
their members and contacts in their respective
European countries. Accompanying the launch
of the survey were targeted press and social
media outreach activities, with the benchmarking
research press release being translated into five
European languages (French, German, Dutch,
Italian and Spanish) and interviews with key
people from each research partner featured
on CrowdfundInsider, a popular global media
outlet specialising in crowdfunding and peerto-peer lending. To reach other leading online
alternative finance platforms not associated with
any organisations, or who were not responding
to the survey request, members of the research
team communicated directly with them by email
or telephone, explaining our research objectives
and asking for their cooperation individually. In
the cases where primary data was not obtainable
[11]
[12]
2,957 million
Total transaction volume of the online
European alternative finance market
144%
Growth of the online European alternative
finance market compared with 2013
620 million
Total transaction volume of the online
European alternative finance market
excluding the UK
201 million
Early-stage, growth and working capital
funding provided to European startups and SMEs through alternative
finance platforms
873m
MOVING MAINSTREAM
620m
83%
350m
338m
147%
137m
2012
2013
2012
2013
2014
Europe excluding
the UKSize and Growth Rate (2012-2014) m UK
a) European Alternative
Finance Market
2014
2957m
The rest of
Europe
25.7%
UK's % Share of
European Alternative
Finance Market
(3 year average)
UK
74.3%
UK VS REST OF EUROPE
AVERAGE
GROWTH RATE
AVERAGE
GROWTH RATE
2957m
2337m
144%
168%
1211m
873m
149%
620m
150%
83%
487m
350m
338m
147%
137m
2012
2013
2014
2012
2013
2014
2012
2013
2014
UK
[13]
3
3
4
2
1
65
31
5
33
11
31
2
3
1
2
34
1
2
1
MOVING MAINSTREAM
Total volume in m
3125+
625-3125
125-625
25-125
5-25
1-5
0.2-1
0.04-0.2
0.008-0.04
[15]
25
20
100
15
10
50
(TOPof
16 Alternative
COUNTRIES) Finance
BY COUNTRY
AND PER CAPITA
e) Comparative Volume
Transactions
in 2014
2014 Volume in m
30
150
Totalvolume
volumeofofAlternative
Alternative
Finance
Total
Finance
Transactions in 2014 m
Transactions in 2014 m
2500
2337m
Alternative
Alternative
FinanceFinance
Volume PerVolume
Capita in
Per Capita in
40
36.0
2000
35
30
200
150
20
16.7
15
10.9
10
140m
4.6
3.1
2.4
1.9
1.7
1.5
1.3
0.4
0.4
0.2
0.2
0.2
0.2
UK
Es
to
nia
Sw
Th
ed
e
Ne
en
th
er
lan
ds
Fi
nla
nd
Fr
an
ce
Ice
lan
d
Ge
rm
an
Sw
y
itz
er
lan
d
Sp
ain
De
nm
ar
k
Au
st
ria
Be
Cz
lg
ium
ec
h
Re
pu
bl
ic
Sl
ov
ak
ia
No
rw
ay
2014 Volume in m
154m
25
107m
100
78m
62m
50
22m
17m
12m
8.2m
Ita
ly
Po
lan
d
Au
st
ria
Be
lg
ium
De
nm
Cz
ec
ar
h
k
Re
pu
bl
ic
Sl
ov
ak
ia
in
Es
to
nia
Fi
nla
nd
Sw
itz
er
lan
d
Sp
a
UK
Fr
an
ce
Ge
rm
an
y
Sw
Th
ed
e
Ne
en
th
er
lan
ds
MOVING MAINSTREAM
274.62m
Reward-based
Crowdfunding
120.33m
Peer-to-Peer
Business Lending
Equity-based
Crowdfunding
82.56m
Community Shares/
Microfinance
19.91m
Donation-based
Crowdfunding
16.34m
Invoice Trading
6.63m
Debt-based
Securities
3.61m
Pension-led Funding
93.1m
N/A
[17]
verage Growth Rate for Alternative Finance Models in Europe (Excluding the UK) 2012-2014
ALTERNATIVE FINANCE MODELS IN EUROPE (EXCLUDING THE UK)
VOLUME IN M AND AVERAGE GROWTH RATE
2012-2014
AVERAGE
GROWTH RATE
P2P Consumer
Lending
Reward-based
Crowdfunding
P2P Business
Lending
7.8m
Equity-based
Crowdfunding
18.4m
Community Shares/
Microfinance
19.9m
16.5m
19.6m
Donation-based
Crowdfunding
Invoice Trading
Debt-based
Securities
120.3m
63.1m
24.0m
39.6m
47.5m
274.6m
157.1m
62.5m
113%
127%
93.1m
272%
82.6m
116%
2%
16.3m
11.2m
4.3m
104%
6.6m
0.9m
0.0m
2014
2013
3.6m
1.7m
0.5m
4768%
171%
2012
Other
1.3m
0.1m
0.0m
633%
50
100
150
200
250
300
Volume in m
MOVING MAINSTREAM
The market
has achieved
strong and
diversified
growth across
a wide array
of models
[19]
The vitality of
alternative finance
for SMEs in Europe
Online alternative finance platforms
can be an effective source of funding
for start-ups and SMEs
[20]
MOVING MAINSTREAM
Total Volume of Alternative Business Funding for SMEs in Europe and Average Growth Rates (2012-2014)
THE VITALITY OF THE ALTERNATIVE FINANCE MARKET FOR SMEs IN EUROPE
ALTERNATIVE FINANCE FOR SMEs
IN EUROPE (EXCLUDING THE UK)
2012-2014
j)NUMBER
NumberOF
ofEUROPEAN
European SMEs
Raised Alternative F
SMEs that
RAISING
ALTERNATIVE FINANCE (EXCLUDING THE UK)
2012-2014
TOTAL RAISED
TOTAL COUNT
385
million
9743
SMEs
AVERAGE
GROWTH RATE
AVERAGE
GROWTH RATE
5801
201m
103%
72%
2858
117m
76%
164%
66m
1084
2012
2013
2014
2012
2013
2014
Number of SMEs
Including P2P business lending, invoice trading,
equity-based crowdfunding, debt-based securities
+ 10% of reward-based crowdfunding
[21]
TheNumber
numberof
ofVentures
total ventures
funded
k) The
Funded
and the
and the number of active funders
AVERAGE
GROWTH RATE
348,241
1515k
68%
206,704
69%
898k
177%
113%
422k
74,583
2012
2013
2014
[22]
2012
2013
2014
ex
MOVING MAINSTREAM
20
40
60
80
100
Inflow
Outflow
Outflow:
0%
41%-50%
1%-5%
51%-60%
6-10%
61%-70%
11%-20%
71%-80%
21%-30%
81%-90%
31%-40%
91%-100
5%
4% 3%
24%
10%
15%
21%
18%
[24]
are both divided and highly varied. The panEuropean response from the platforms reflects
this variation. For example, while 18.42% of the
respondents state that the existing regulations
in their countries are adequate and appropriate,
21.05% argue that they are excessive and too
strict. However, across Europe, 14.74% of the
respondents in countries currently without
dedicated regulations are actively calling for them,
while 23.68% of the surveyed platforms suggested
that the proposed regulations are excessive and
too strict. In terms of individual countries, in
France and the Netherlands, over 40% of surveyed
alternative finance platforms perceive the existing
regulations to be adequate and appropriate,
while very sizeable proportions of respondents
in Germany (58.06%), Spain (52.94%) and the
Nordic countries (36.46%) believe the proposed
regulations in online alternative finance are
excessive and too strict, indicating significant
differences across European jurisdictions.
Government support
The French government has been strongly
supportive of crowdfunding. It created a dedicated
website for this industry, where major French
crowdfunding projects are listed among many
other activities in the industry. It also provided
back-office support to some of them through the
Public Investment Bank (BPI). Certain banks and
insurers invested directly into platforms, or coinvested in crowdfunding projects during 2014.
Two asset managers and several public institutions
are also currently launching their own peer-topeer lending platforms.
The French crowdfunding market is no
longer a niche market. An overall ecosystem is
[26]
Fast growth
The fast growth of the industry raises many
questions. First of all, how will the consumer
or the investor be able to
ensure the platform can
be trusted? As the number
of platforms increases,
good practice such as
transparency, deal flow
management and project
owner due diligence
may suffer. Second, as
nearly everyone can start
their own crowdfunding
campaign, questions on
Marianne Iizuka
the ultimate beneficiary of
the funds may be raised.
Therefore, it is now vital for the alternative
finance industry in France to continue to develop
and professionalise in order to promote trust
among investors and consumers.
An overall
ecosystem is
evolving for
this young
industry
nce
MOVING MAINSTREAM
France
France
Total French
Totalalternative
French alternative
finance market
financesize
market
in msize in m
Perception
Perception
of regulations
of regulations
in Francein France
GROWTH RATE
TOTAL RAISED
6%
3%
6%
15%
6%
3%
3%
15%
15%
154m
253253
253
million
million
million
103%
42%
42%
42%
103%
103%
76m
230%
154m
154m
33%33% 33%
Theregulations
existing
regulations
in my country
The The
existing
in my
country
existing
regulations
in my
country
are adequate
and appropriate
are adequate
andand
appropriate
are adequate
appropriate
76m
76m
existing
regulations
in my in my
Theregulations
existing
regulations
The The
existing
in my
country
are excessive
strict
country
are excessive
and
too strict
country
are
excessive
andand
tootoo
strict
230%
230%
proposed
regulations
in my in my
The proposed
regulations
The The
proposed
regulations
in my
country
are excessive
strict
country
are excessive
and
too strict
country
are
excessive
andand
tootoo
strict
23m
23m
23m
Not sure
Not Not
suresure
The existing regulations in my country
2012
2012
2013
20122013
20132014
Theregulations
existing regulations
in my country
The existing
in my country
are inadequate and too relaxed
are inadequate
and too relaxed
are inadequate
and too relaxed
2014
2014
AVERAGE
AVERAGERATE
AVERAGE
GROWTH
GROWTH RATE
GROWTH RATE
80.0m
P2P Consumer
Lending
P2P Consumer
P2P Consumer
43.0m
12.0m
Lending Lending
12.0m
43.0m
80.0m
43.0m
19.8m
5.5m
Crowdfunding
Crowdfunding
5.5m
19.8m
35.4m
170%
35.4m
170%
19.8m
5.0m
9.5m
Equity-based
Equity-based
9.5m
Crowdfunding
Crowdfunding
5.0m
5.0m
18.9m
9.5m
94%
18.9m
94%
8.1m
P2P Business
Lending
P2P Business
P2P Business
0.2m
Lending Lending
0.0m
Invoice Trading
0.2m
0.0m
8.1m
Donation-based
Crowdfunding
3443%
0.2m
0.0m
6.0m
6.0m
6.0m
0.9m
0.0m 5.9m
2014
0.01m
2012
10
20
30
40
50
60
4733%
97%
2013
2012 2013
0.0m
0.0m
0.01m
0.0m
0.0m
4733%
2014
2013 2014
3.0m
0.0m
Debt-based
Debt-based
0.0m
0.0m 0
SecuritiesSecurities
3443%
4733%
0.9m
0.0m
5.9m
5.9m
Donation-based
Donation-based
3.0m
3.0m
Crowdfunding
Crowdfunding
0.01m
0.0m
0.0m
Debt-based
Securities
94%
3443%
8.1m
0.9m
Invoice Trading
Invoice Trading
0.0m
170%
5.5m
18.9m
Equity-based
Crowdfunding
172%
12.0m
35.4m
Reward-based
Crowdfunding
Reward-based
Reward-based
172%
80.0m
172%
97%
97%
2012
70
80
Volume in m
010
1020
20
30
30
40
40
50
Volume inVolume
m
in m
50
60
60
70
70
80
80
[27]
[28]
Rules on advertising
The regulations also include a requirement for
an Investment Products Information Leaflet
(Vermgensanlagen-Informationsblatt), which
is proposed to be manually signed and mailed by
the investor, as well as rules on the advertising of
crowdfunding projects online. For example, it is
possible to advertise them in the printed press in
Germany, but not in online media or on Facebook,
Twitter or other social networks.
For peer-to-peer lending, the draft regulation
states that loans to private borrowers should
not be within the scope of the law if a regulated
bank is an intermediary in the lending process
and, thus, selling the loans from the borrower
to the lender. Other forms of crowdfunding and
collaborative finance, such as donation- and
rewards-based crowdfunding, have been exempted
from the new regulation.
The law will be brought into force by 1 July 2015.
The parliamentary debate is set for February to
April 2015. The German Crowdfunding Networks
position is that government should follow the
examples set by other countries, such as France,
the UK and the Netherlands, which have created
a disclosures-based regulatory framework.
Karsten Wenzlaff is the coordinator of the
German Crowdfunding Network and a member
of the European Crowdfunding Stakeholder
Forum. He has an MPhil from Cambridge
University and is the CEO of ikosom, a private
research centre in Berlin.
MOVING MAINSTREAM
Germany
ermany
Germany
236
236
236
million
million
million
115%
140m
6%
140m
140m
10%
10%
115%
115%
31m
31m
2012
2013
2014
2012 2012 2013 2013 2014 2014
P2P Consumer
P2P Consumer
P2P Consumer
Lending
LendingLending
20.0m
20.0m 20.0m
Equity-based
Equity-based
Equity-based
Crowdfunding
Crowdfunding
Crowdfunding
4.6m
10%
10%
10%
10%
58%
17.3m 29.8m
17.3m
4.6m 17.3m
4.6m
Reward-based
16.8m
Reward-based
Reward-based5.7m 5.7m
5.7m
Crowdfunding
3.9m
Crowdfunding
Crowdfunding
3.9m
3.9m
58%
58%
110%
110%
31m
3%
6%
3%
3%
6%
13%
13%
13%
65m
65m
65m
110%
AVERAGE
AVERAGE
AVERAGE
GROWTH
RATE
GROWTHGROWTH
RATE
RATE
80.4m
80.4m 80.4m
36.4m
36.4m 36.4m
101%
101%
101%
174%
174%
174%
119%
119%
119%
29.8m
29.8m
16.8m
16.8m
6.1m
101567%
101567% 101567%
5.8m
2014
0.9m
0.9m 0.0m
0.9m
Other
Other Other
0.0m 0.0m
0.0m
0.0m
2014
2014
2013
2013
2013
2012
2012
2012
0.0m
20
20
20
40
40
60
40
60
60
Volume in m
Volume Volume
in m in m
80
80
80
57%
57%
57%
2900%
2900% 2900%
100
100
100
[29]
Proposed changes
There is no specific crowdfunding regulation in the
Netherlands. At the moment, 30 companies have
a licence or exemption to offer financial products
through online platforms based on existing financial
regulations. For investors, it is not permitted to
either invest in more than 100 projects, invest more
than 20,000 in equity through an online platform,
or invest more than 40,000 in debt. For projects
raising in excess of 2.5m, a prospectus is required.
During the final months of 2014, the AFM carried
out in-depth research into the crowdfunding
market in consultation with major stakeholders
in the industry. The draft version of the proposed
changes was published on 19 December 2014.
The most important change is expected to be the
introduction of new crowdfunding regulations
for lending and equity, but the regulator does
[30]
MOVING MAINSTREAM
Perception
Perception
of regulations
of regulations
in TheinNetherlands
The Netherlands
AVERAGE
AVERAGE
GROWTH
RATE RATE
TOTALTOTAL
RAISED
RAISED GROWTH
AVERAGE
GROWTH RATE
TOTAL RAISED
6%
6%
6%
6%
78m 78m
155
155
155
million
million
million
6%
6%
13% 13%
78m
42% 42%
42%
13%
70% 70%
13% 13%
13%
70%
19% 19%
19%
46m 46m
46m
The existing
The existing
regulations
regulations
in myincountry
my country
are adequate
are
and appropriate
and appropriate
Theadequate
existing
regulations
in my country
are don't
adequate
and
appropriate
We don't
We
have have
specific
specific
regulations
regulations
in
in
48% 48%
48%
31m 31m
31m
alternative
alternative
finance
finance
and
we
and
need
we
need
them them
We don't
have
specific
regulations
in
alternative
finance
and
we
need them
The existing
The existing
regulations
regulations
in myin my
20122012
2012
20132013
2013
P2P Business
P2P Business
Lending
P2P Lending
Business
Lending
country
country
are
excessive
are excessive
and too
and
strict
too
The
existing
regulations
in
my strict
country are excessive and too strict
Not sure
Not sure
Not sure
The existing
The existing
regulations
regulations
in myin my
country
country
are
inadequate
are inadequate
and too
and
too relaxed
The
existing
regulations
in relaxed
my
country are inadequate and too relaxed
We don't
We don't
have have
specific
specific
regulations
regulations
in
in
alternative
alternative
finance
finance
and
there
and there
is no is
need
no need
for
for them
We don't
have
specific
regulations
in them
alternative finance and there is no need for them
20142014
2014
AVERAGE
AVERAGE
GROWTH
GROWTH
RATE RATE
AVERAGE
GROWTH RATE
35.3m35.3m
257%
35.3m
18.2m 18.2m
3.5m 3.5m
3.5m
19.9m19.9m
16.5m16.5m
19.9m
19.6m19.6m
16.5m
Community
Community
Shares
Shares
/Microfinance
/Microfinance
Community
Shares
/Microfinance
2%
2%
11.2m 11.2m
6.2m 6.2m
5.7m 5.7m
6.2m
44% 44%
11.2m
44%
5.7m
4.4m 4.4m
Reward-based
Reward-based
1.5m 1.5m
4.4m
Crowdfunding
Crowdfunding
Reward-based
0.5m 0.5m
1.5m
Crowdfunding 0.5m
211% 211%
211%
2014 2014
2014
2013 2013
2013
2012 2012
2012
3.8m 3.8m
Donation-based
Donation-based
2.3m 2.3m
3.8m
Crowdfunding
Crowdfunding
Donation-based
1.4m 1.4m
2.3m
Crowdfunding
1.4m
3.6m 3.6m
Debt-based
Debt-based
1.8m 1.8m 3.6m
Securities
Securities
Debt-based
0.5m 0.5m
1.8m
Securities 0.5m
0
0
2%
19.6m
Equity-based
Equity-based
Crowdfunding
Crowdfunding
Equity-based
Crowdfunding
257%
257%
18.2m
5
5
10
10
10
15
15
20 20 25
15 Volume
20in m
Volume
in m
Volume in m
25
25
30
30
30
35
67% 67%
67%
171% 171%
171%
35
35
40
40
40
[31]
An alternative model
As for investment crowdfunding, this is becoming
a realistic alternative, but it still has to overcome
the hurdle of scepticism from a population that
has endured several major financial crises and
scandals in recent years. However, loss of trust in
mainstream institutions is arguably fuelling faith
in the sharing economy as an alternative model.
Crowdfunding is gaining popularity and building
a strong reputation but is still, in my view, often
misunderstood and underused.
Specific legislation has been introduced in
relation to crowdfunding. This new legislation
limits the use of equity and debt crowdfunding to
a maximum 2m per project where non-accredited
[32]
Loss of trust
in mainstream
institutions is
fuelling faith
in the sharing
economy
MOVING MAINSTREAM
Spain Spain
Total Spanish
Total Spanish
alternative
alternative
financefinance
marketmarket
size in size
m in m
AVERAGE
AVERAGE
TOTAL RAISED
TOTAL RAISEDGROWTH
GROWTH
RATE RATE
Perception
Perception
of regulations
of regulations
in Spain
in Spain
9%
101101
million
million
15%
62m
3%
9%
3%
15%
53%
62m
21%
53%
21%
114% 114%
The proposed
The proposed
regulations
regulations
in my in my
country
country
are excessive
are excessive
and too
and
strict
too strict
29m
29m
The existing
The existing
regulations
regulations
in my in my
country
country
are excessive
are excessive
and too
and
strict
too strict
190% 190%
10m
Not sure
Not sure
10m
2012 2012
We don't
Wehave
don'tspecific
have specific
regulations
regulations
in alternative
in alternative
financefinance
and weand
need
wethem
need them
2013 2013
The existing
The existing
regulations
regulations
in my in my
country
country
are inadequate
are inadequate
and too
and
relaxed
too relaxed
2014 2014
AVERAGE
AVERAGE
GROWTH
GROWTH
RATE RATE
Reward-based
Reward-based
Crowdfunding
Crowdfunding
8.1m
6.2m
1.2m
111%
13.7m 13.7m
P2P Business
P2P Business
2.8m 2.8m
Lending
Lending
0.6m 0.6m
Equity-based
Equity-based
Crowdfunding
Crowdfunding
1.2m
35.1m 35.1m
19.5m 19.5m
8.1m
363% 363%
10.5m 10.5m
6.2m
234% 234%
0.8m 0.8m
Donation-based
Donation-based
0.6m 0.6m
Crowdfunding
Crowdfunding
0.3m 0.3m
0.6m
0.0m
InvoiceInvoice
Trading
Trading
0.0m
71%
71%
50%
50%
163%
163%
0.6m
0.0m
0.0m
0.6m 0.6m
Mini-bond
Mini-bond
0.0m 0.0m
Offering
Offering
0.0m 0.0m
2014 2014
2013 2013
0.012m 0.012m
Microfinance
Microfinance
0.008m0.008m
0.0m
111%
0.0m
2012 2012
Other
0.2m 0.2m
0.1m 0.1m
Other
0.0m 0.0m
10
10
15
15 20
20 25
Volume
Volume
in m in m
25 30
30 35
35 40
40
[33]
Much of
the market
education
effort falls on
the platforms
themselves
[34]
MOVING MAINSTREAM
Nordics
TOTAL RAISED
115%
8%
8%
254
million
38%
15%
128m
36%
94m
31%
194%
2012
2013
2014
AVERAGE
GROWTH RATE
87.0m
P2P Consumer
Lending
26.9m
28.4m
P2P Business
Lending
58%
18.0m
3.5m
9.1m
Reward-based
Crowdfunding
Equity-based
Crowdfunding
90%
67.6m
143%
5.8m
1.8m
3.7m
2014
2.9m
1389%
0.1m
2013
Donation-based
Crowdfunding
0.1m
2012
0.1m
220%
0.0m
20
40
60
80
100
Volume in m
[35]
[36]
MOVING MAINSTREAM
AVERAGE
GROWTH RATE
Total raised
159%
2337m
3560
million
168%
873m
149%
350m
2012
2013
P2P Business
Lending
2014
P2P Consumer
Lending
167m
Equity-based
Crowdfunding
47m
37m
5m
Reward-based
Crowdfunding
34m
25m
6m
Pension-Led
Funding
33m
30m
30m
Donation-based
Crowdfunding
127m
376m
752m
354m
174%
111m
420%
93%
176%
2014
5%
2013
2012
8m
4m
1m
200%
3m
1m
1m
253%
113%
44m
20m
12m
Community Shares
Debt-based
Securities
998m
253m
81m
Invoice Trading
AVERAGE
GROWTH RATE
100%
200
400
600
Volume in m
800
1000
[37]
Bruce Davis
[38]
MOVING MAINSTREAM
Number of platforms
>25
4
3
2
1
[39]
Conclusion
Alternative finance is moving
mainstream, but there are still risks
that could hamper its development
Dramatic variations
The market size and growth numbers for Europe as
a whole, however, obscure dramatic variation in the
pattern of alternative finance development between
individual European economies. In 2015, the UK
alternative finance market is projected to exceed
5,700m, which is more than five times larger than
the market volume projected for the rest of Europe,
and the growth rate in the UK continues to outpace
the rest of Europe. Italy is the fourth largest country
in Europe, with a population similar in size to the
1,300 million
5,700 million
[40]
MOVING MAINSTREAM
Striking a balance
While alternative finance is moving mainstream,
there are a number of risks to its continued
development. There is a clear need to strike the
right balance between a regulatory regime aimed
7,000 million
Projected total transaction volume of
the European online alternative finance
market in 2015
[41]
Endnotes
This benchmarking research was designed, carried out and authored by researchers at the University
of Cambridge with support from EY. For general purposes, please quote this report as (CambridgeEY, 2015). For academic reference, please quote this report as (Zhang, Z., Wardrop, R., Rau, P.R. and
Gray, M., 2015).
2
Understanding Alternative Finance the UK Alternative Finance Industry Report (Zhang, Z., Collins, L.
and Baeck, P., 2014), Nesta and the University of Cambridge: London.
The Rise of Future Finance The UK Alternative Finance Benchmarking Report (Zhang, Z., Collins, L.
and Swart, R., 2013), Nesta, the University of Cambridge and UC Berkeley: London
3
The size of the UK alternative finance market in 2014 was estimated to be 1.74bn by the joint NestaCambridge Understanding Alternative Finance industry report. This figure is then revised upwards to
1.78bn due to new and additional data obtained on UK platforms through European benchmarking
research. The exchange rate used throughout the report was 1.3111447 (Pound to Euro).
4
Allen & Overy (2014) Funding European Business: Whats the Alternative? http://www.allenovery.com/
SiteCollectionDocuments/Funding-European-Business-Whats-the-alternative.pdf
5
McKee, J. (2013) Redefining Virtual Currency, Yankee Group, http://home.tapjoy.com/info/wp-content/
uploads/sites/4/2013/05/RedefiningVirtualCurrency_WhitePaper-1MAY2013-v1.pdf
6
Out of the 205 benchmarking survey responses, 15 were from UK-based online platforms and 190 were
gathered from European online alternative finance platforms outside of the UK. The 15 survey entries
from UK-based platforms were then combined with the 50 survey responses captured previously from
the joint Nesta-Cambridge industry research to provide an updated dataset for the UK.
7
As noted in endnote 3
8
The population estimations for each surveyed European country were obtained from
http://en.wikipedia.org/wiki/List_of_European_countries_by_population, which sourced population
statistics from yearly or monthly official estimates or the most recent census information. (Accessed
on 29 January 2015)
9
For peer-to-peer lending, the market is further segmented into peer-to-peer consumer lending and
peer-to-peer business lending to reflect their distinctive funding mechanisms and financing purposes.
There were no visible transactional activities recorded for revenue- or profit-sharing crowdfunding
in Europe between 2013-2014. All hybridised crowdfunding transactions on surveyed platforms were
broken down and added into the total volume of other forms of categorised alternative finance models.
10
For reward-based crowdfunding, in addition to the survey data provided directly by alternative
finance platforms, the research team also used both manual and script-based scrapping techniques to
estimate and calculate the size of the market for each European country surveyed. Wherever possible,
most funded reward-based crowdfunding projects (typically all projects with more than $1,000 total
funding and funded between January 2012 and 6 January 2015) were manually scrapped from two wellknown global crowdfunding platforms. The manually scrapped database was then cross-referenced
with the data obtained through script-based scrapping methods to achieve better estimations. The
verified data was then added to the countrys total volume in reward-based crowdfunding. For the
number of ventures funded through reward-based crowdfunding, only results obtained from scriptbased scrapping methods were added to the total. 10% of those total ventures was then taken as an
estimation for the number of start-ups and SMEs funded through reward-based crowdfunding.
11
EBAN (2014, 2) The European Trade Association for Business Angels, Seed Funds, and other Early
Stage Market Players Statistics Compendium for 2014
12
ECB-European Commission (2013,6-8) SMEs Access to Finance Survey 2013,
http://ec.europa.eu/enterprise/policies/finance/files/2013-safe-analytical-report_en.pdf
13
As above
14
European Banking Federation (2014, 30) 2014 European Banking Sector Facts & Figures
http://publications.ebf-fbe.eu/European%20Banking%20Sector%20Facts%20_%20Figures%202014#p=0
15
As above
16
Quoted from the Understanding Alternative Finance report (2014, 13) and based on the Bank of Englands
Trends in Lending figures (BOE, 2014 October).
1
[42]
MOVING MAINSTREAM
Acknowledgements
Research partners
Media partner
Supporting organisations
Copyright information
All rights reserved. University of Cambridge and
EY 2015. Copyright: the contents of this report are
protected by copyright law.
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[43]
Moving Mainstream
The European Alternative Finance Benchmarking Report
Robert Wardrop, Bryan Zhang, Raghavendra Rau and Mia Gray
February 2015