The UK’s alternative finance market is set to continue its rapid growth and diversification over the course of 2015, according to a new report on the subject from the innovation charity Nesta.
A range of organisations and experts contributed to the study which makes clear that new technologies and online platforms are helping to open up new routes to finance for small to medium-sized enterprises (SMEs) across the UK and beyond.
According to the latest figures, Britain’s alternative funding market is set to be worth £1.74 billion by the end of 2014, with over 7,000 businesses likely to have used alternative means to access finance over the course of the calendar year.
Among the key trends picked out in the report is the continued growth in crowdfunding markets, with peer-to-peer (P2P) business lending spreading across a wide variety of sectors and circumstances. Nesta’s numbers show as well that three-quarters of the organisations that received funding through reward or equity-based crowdfunding managed to launch a new product or service as a result. Around 70 per cent saw a subsequent increase in turnover and just under two-thirds (63 per cent) were able to boost their profits after finding funding through P2P platforms.
P2P business lending and other alternative finance processes are though clearly gaining momentum in the UK, with thousands of SMEs now using them to access cash when they might otherwise have been left unable to access credit of any kind. According to the report, 33 per cent of P2P business borrowers felt they would not have had any other way of accessing funds.
“There is a growing movement afoot to revolutionise banking, investing and giving by using technology to simplify the links between those who want to invest money and those who need it,” said Stian Westlake, executive director of policy and research at Nesta.
“The alternative finance industry is quickly becoming an important part of the UK economy. The innovative, technology-led approach has improved access to finance for SMEs and seems to be having a positive impact on social and charitable enterprises,” added Mark James and Fergus Lemon from the accounting and auditing firm PwC, which contributed to Nesta’s report.
According to the research, the UK’s alternative finance sector has doubled in size year-on-year since the start of the decade, with the market worth £267 million in 2012, £666 million in 2013 and an anticipated £1.74 billion in 2014.