By connecting people directly and offering more efficient, diverse and transparent ways to invest or raise funds, alternative finance is increasingly becoming a viable source of capital for individuals and businesses alike.
- Bryan Zhang
A total of £1.74 billion will have been raised through alternative finance intermediaries – including crowdfunding, peer-to-peer lending and invoice trading – by the end of 2014, according to new research published by the University of Cambridge and Nesta, the UK’s innovation foundation.
Alternative finance covers a variety of new financing models which connect people seeking funds directly with funders, often through online platforms. The majority of these providers have been founded in the last five years. Regulation of parts of the industry was introduced by the Financial Conduct Authority (FCA) in April this year, and in October the Treasury launched a consultation on a proposal for an ISA for peer-to-peer lending.
In the first three quarters of 2014, alternative finance platforms facilitated loans, investments and donations worth £1.2 billion, with the amount predicted to reach £1.74 billion by the end of the year. The researchers predict the amount will reach £4.4 billion in 2015.
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Image: Crowdfunding
Credit: Rocío Lara via flickr
Reproduced courtesy of University of Cambridge
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