DIY Investor Magazine
/
December 2015
27
Now that the Christmas lights are on and the evenings
have drawn in, it feels like the time to be festive and
celebrate. The firms across the UK that have been
pioneering the crowdfunding sector in 2015 must also
feel like celebrating.
Over the last 7 years, there has been a revolution in
the technological capabilities of financial services
providers. Lean, instant and lower-cost alternatives are
now available.
These dynamic solutions are challenging traditional
financial institutions, and the ubiquity of Alternative
Finance and Financial Technology firms is quickly
becoming a reality.
We will look back at 2015 as the year that crowdfunding
entered the conscience of every type of investor across
the world.
In the UK alone, the growth of some of the Alternative
Finance providers has been astonishing; in total
Wellesley have made loans of over £250 million, and
Funding Circle over £923 million. Zopa have lent in
excess of £1.16 billion to over 150,000 people since
2005.
This time last year, Nesta and the University of
Cambridge projected that the entire UK alternative
finance market would grow to around £4.4 billion in
2015.
I predict that, upon reflection, this estimate will look
modest by the close of Q2.
Adam Braggs
Crowdnetic
The explosion in P2P (or debt) lending coincides with
the burgeoning equity crowdfunding market, worth just
£84 million in 2014.
The concept of equity crowdfunding is straightforward
– each member of an investor community, or ‘crowd’,
receives a piece of ownership in the company that
they invest in. This may be for shares in a start-up, or
shares in an established company, or in the case of
property crowdfunding, shares in a company that holds
a property asset.
WHAT DOES EQUITY CROWDFUNDING LOOK
LIKE?
In the last issue, I said I would assess the differences
between some of the household names in equity
crowdfunding: Seedrs, Crowdcube, Angels Den and
Property Moose: first, what do they all have in common?
They each have thousands of members (Crowdcube
has nearly 230,000 registered investors), all have
successfully raised funds for dozens of exciting projects
(Seedrs have funded 250+ business equity pitches),
each has an international presence (Property Moose
has members in nearly 50 countries), and they have all
raised millions using their websites.
There are similarities behind the scenes too: all four
firms are backed by venture capital, and perhaps
most interestingly, all have raised (or in the case
of AngelsDen, are in the process of raising) equity
investment for their own growth using crowdfunding.
The similarities continue, but differences appear
when we assess their outputs: income for investors,
investment risk, and exit plans.
It is the differences that make this sector so exciting,
but it is important be aware of the different offerings
within the equity sphere.
SPOTLIGHT ON EQUITY
CROWDFUNDING
“WE WILL LOOK BACK AT 2015 AS THE YEAR THAT
CROWDFUNDING ENTERED THE CONSCIENCE OF
EVERY TYPE OF INVESTOR ACROSS THE WORLD.
