Monday 6th January, 2014

Market data by Nesta, University of Cambridge and University of California, Berkeley, has found £939m has been raised through alternative finance intermediaries – including crowdfunding, peer-to-peer lending and invoice trading in 2013.

Data shows the UK’s first figures on the size and growth of the alternative finance market ahead of the Financial Conduct Authority’s consultation on crowdfunding regulation closing date. The rapid growth of this sector highlights the need to strike a balance between protecting investors and enabling the alternative finance industries to expand.

According to the data these new ways of finding and securing finance are increasingly popular and fulfilling the potential that many have predicted.

The survey of more than 50 UK based alternative finance intermediaries found that the UK alternative finance market provided £463m worth of early-stage, growth and working capital to over 5,000 start-ups and SMEs in the UK between 2011-2013.

The research team predicts that in 2014 the UK alternative finance market will grow to £1.6 billion and provide £840m worth of business finance for start-ups and SMEs.

Liam Collins, a researcher on the project and policy advisor at Nesta, explains: "The data provides a timely snapshot of a booming UK alternative finance industry. Both the rapid growth and the diversity of this industry hold significant promise for the UK economy going forward."

Julia Groves, Chair of the UKCFA said: "the data proves that our sector is increasingly moving from "alternative finance" to mainstream "modern finance". Crowdfunding is already providing real value in the provision of desperately needed capital in the engine room of the UK economy. With growing awareness and the advent of a new regulatory framework early next year the future looks extremely bright and the sector is primed to go on and completely replace aspects of retail banking".