Moving Mainstream: Benchmarking the European Alternative Finance Market

Abstract

Since the global financial crisis, alternative finance — which includes financial instruments and distributive channels that emerge outside of the traditional financial system – has thrived in the U.S., the U.K. and Continental Europe. In particular, online alternative finance, from equity-based crowdfunding to peer-to-peer (P2P) business lending, and from reward-based crowdfunding to debt-based securities, is supplying credit to SMEs, providing venture capital to start-ups, offering more diverse and transparent ways for consumers to invest or borrow money, fostering innovation, generating jobs and funding worthwhile social causes. Although a number of studies, including those carried out by the University of Cambridge and its research partners, 3 have documented the rise of crowdfunding and P2P lending in the U.K., we actually know very little about the size, growth and diversity of various online platform-based alternative finance markets in key European countries. There is no independent, systematic and reliable research to scientifically benchmark the European alternative finance market, nor to inform policymakers, brief regulators, update the press and educate the public. It is in this context that the University of Cambridge has collaborated with EY and 14 leading national/regional industry associations to collect industry data directly from 255 leading platforms in Europe through a web-based questionnaire, capturing an estimated 85%–90% of the European online alternative finance market. This article presents the results of this study, conducted between October 2014 and January 2015.