The UK’s alternative finance market has grown over 43% during the last year according to a new report.
The study, conducted by the University of Cambridge, revealed that the market is now worth £4.3 billion, in line with the continued rise of sector heavyweights such as Crowdcube, Seedrs and Funding Circle.
The sector’s bread-winner is the peer-to-peer business lending industry, valued at just over £1.2 billion with peer-to-peer consumer and property lending both following closely behind. Almost three quarters of the volume of alternative finance raised — £3.3 billion — went to start-ups and small businesses. The report said that this was a 50% increase on 2015, while 33,000 firms used alternative finance in 2016, compared with 20,000 in 2015.
“Online alternative finance has become an ever more established component of the UK financial landscape,” said Bryan Zhang, executive director of the Cambridge Centre for Alternative Finance.
“With equity-based crowdfunding now accounting for 17% of all seed and venture stage equity investment in the UK, and peer-to-peer business lending providing an equivalent of 15% of all new loans lent to small businesses by UK banks, alternative finance has entered the mainstream and is likely here to stay.”
However, the report also revealed that, despite the growth in volumes, 35 UK online alternative finance platforms became inactive in 2016 through mergers or closure with the five largest operators in the sector accounting for 64% of total market volume.