Breaking New Grounds — April 2016
THE USE OF ONLINE ALTERNATIVE FINANCE BY BUSINESSES Across the region, online alternative business funding accounted for $7.01 billion in 2015, or roughly 20% of the entire alternative finance market. The US was responsible for $6.88 billion, while the rest of the region supplied $121.60 million to businesses including startups and SMEs. Over the three-year period, business finance grew at an average annual rate of 147%, starting at $1.15 billion in 2013 and reaching $2.86 billion in 2014. In this report, alternative business funding includes transactional volumes from marketplace/P2P business lending, balance sheet business lending, invoice trading, equity-based crowdfunding, marketplace/P2P real estate lending models16 and real estate crowdfunding.17,18 We also attributed reward-based and donation-based crowdfunding to business finance volumes where so indicated by the surveyed platforms. In addition, 35% of our web-scraped, reward-based platform data was attributed to business finance.19
Fig.31
Figure 20: US vs Rest of Region Total Online Alternative Business Funding Volumes 2013–2015 ($USD) $ 8bn
$ 7bn
$ 0.12bn
$ 6bn
$ 5bn
$ 4bn $ 6.88bn $ 0.06bn
$ 3bn
$ 2bn $ 0.02bn
$ 2.80bn
$ 1bn $ 1.13bn
$ 0bn 2013
In the US, lending-models accounted for the vast majority of finance for businesses, generating $5.61 billion in 2015. Of business volumes from lending models, marketplace/P2P business lending accounted for the majority of the overall business finance volume in 2015, with $2.55 billion, followed closely by balance sheet business lending, at $2.25 billion. Invoice trading contributed a more modest $31.88 million in 2015, but was the fastest growing model, up 302% from 2014’s $7.93 million. We expect this model to continue to grow rapidly in 2016, especially as US businesses become familiar with invoice trading outside of traditional factoring services.
2014
2015
US - Online Alternative Business Funding Volume Rest of Region - Online Alternative Business Funding Volume
Fig.32 Figure 21: US – Lending vs Equity Online Alternative Business Finance 2013–2015 ($USD) $ 7bn
$ 6bn
$ 1.06bn
$ 5bn
$ 4bn
$ 3bn $ 5.61bn $ 0.41bn
$ 2bn
$ 2.22bn
$ 1bn $ 0.13bn
$ 0bn
$ 0.85bn
2013
2014
2015
Online Alternative Business Funding Volumes from Lending Models Online Alternative Business Funding Volumes from Equity Models
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