• Alternative finance intermediaries show 91 per cent year on year funding growth since 2012
• Alternative finance market predicted to reach £1.6bn in 2014
• First UK market data on alternative finance, from crowdfunding, peer-to-peer lending and invoice trading, published by Nesta, University of Cambridge and University of California, Berkeley.

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

The UK’s first figures on the size and growth of the alternative finance market are published today ahead of the Financial Conduct Authority’s consultation on crowdfunding regulation closing next Thursday (19 Dec). The rapid growth of this sector highlights the need to strike a balance between protecting investors and enabling the alternative finance industries to expand.

Today’s data shows that these new ways of finding and securing finance are increasingly popular and fulfilling the potential that many have predicted.

The survey** of UK based alternative finance intermediaries shows:

1. 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.
2. Equity-based crowdfunding grew by 618% from 2012-2013.
3. Peer-to-business lending grew by 211% from 2012-2013.

The research team predict 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.” 

Dr Richard Swart, another researcher on the project who directs crowdfunding research at UC Berkeley, adds: “With the cooperation of alternative finance intermediaries, the UK is leading the way in creating comprehensive and valuable data on this important new area of finance.”

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”.

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Notes to editors

For media enquiries please contact Natalie Hodgson on 020 7438 2614 / 07929800765 or [email protected]

• *The alternative finance market includes: peer-to-peer lending, peer-to-business lending, invoice trading, equity-based crowdfunding, reward-based crowdfunding, debt-securities, revenue/profit sharing, microfinance/community shares.
• **This was a questionnaire-based survey that captured more than 95 per cent of all UK-based online alternative financing activities such as crowdfunding, peer-to-peer lending and invoice trading. Data was collected from more than 50 alternative finance intermediaries, including almost all members of the United Kingdom Crowdfunding Association (UKCFA) and the Peer-to-Peer Finance Association (P2PFA).
• For further information on crowdfunding please see Nesta’s report 'Working The Crowd'.