Two ways your pension fund is participating in Alternative Finance

The range of financial institutions getting involved in so-called ‘Alternative Finance’ is expanding to a point at which we will soon have to drop the moniker ‘Alternative.’

An increasing number of pension funds are now participating in online funding marketplaces, in two ways.

In Crowd Valley’s most recent global funding marketplace report, presenting data from Q2 2014, we showed that around a fifth of new entrants coming into this market are financial institutions such as Private Equity firms, Venture Capital, Asset Managers or Investment Banks.

These actors are operating online marketplace platforms that look and feel in some aspects like equity-based crowdfunding sites but with far larger ticket value deals – often in the $50m-$100m range – and they benefit from the greater transparency and efficiency brought by systematizing and moving their compliance and investment processes online.

Accordingly, the first way in which pension funds are participating in Alternative Finance is that pension fund managers are starting to play a role as institutional investors in these platforms. Second, in some countries, pension funds are being used as a tool for company directors to generate additional working capital. Crowd Valley customers who identify themselves as Broker-Dealers, Private Equity firms or Venture Capital firms, for example, often work with pension funds either directly or indirectly through advisory groups.

Read the whole article on Crowd Valley’s blog: http://www.crowdvalley.com/news/two-ways-your-pension-fund-is-participating-in-alternative-finance

The Incredible Numbers of UK’s Alternative Finance Market

Nesta, an UK-based innovation charity with the mission to help people and organisations bring great ideas to life, together with Cambridge University, has recently published an in depth study on the British alternative finance sector. The results are very interesting, highlighting the outstanding growth of this innovative sector, as we report below.

£84 million: predicted market size of equity crowdfunding in 2014, with an average investment of £1000. If the estimates are correct, the market almost tripled its size compared to last year.  One of the key factor behind this rapid growth may have been the ad hoc regulation put in place by the British regulator last April, which has been also heavily criticized by some who thought that the limit posed on retail investors (10% of their net investable assets) was too strict. According to Nesta, only 38% of the investors were professional investors or high net worth individuals.

£749 million: predicted market size of peer-to-peer business lending in 2014. This is the largest crowdfunding market in the UK and if ISAs for P2P lending are enacted, it will probably grow more and even faster. The average loan size is of £73,222 and 63% of the business which received one saw their profits increasing afterwards. A less encouraging fact is that this is mainly a male market: 83% of investors are gentlemen, which reminds us of the great gender difference in the early stage investing sector.

£547 million: predicted market size of peer-to-peer consumer lending in 2014, almost the double compared to last year. While lenders are primarily motivated by the interest rates, for borrowers there must be something more to it: more than an half of the borrowers were offered a loan from a bank, but decided to go with P2P lending.

Read the full post on Crowd Valley’s Blog: http://www.crowdvalley.com/news/the-incredible-numbers-of-uks-alternative-finance-market