Last week the University of Cambridge’s Center for Alternative Finance in conjunction with the Polsky Center for Entrepreneurship and Innovation at the University of Chicago released their second annual report on the state of alternative finance in the America’s. This is important research and here at Lend Academy and LendIt we are proud to be a research partner on the report.
The 77-page report provides an excellent snapshot of the overall market breaking down the various countries, the different verticals as well as the funding methods: marketplace lending, balance sheet lending, real estate crowdfunding, equity crowding, reward-based crowdfunding and donation-based crowdfunding.
Here are some highlights of the report.
Market size and growth
- The online alternative finance market in the America’s grew to $35.2 billion in 2016, up 23% from 2015.
- The 2016 US market volume of $34.5 billion marked a 22 per cent year-on-year increase from 2015.
- Canada’s alternative finance market grew to $334.5 million, a 62 per cent year-on-year increase from 2015.
Prevailing online alternative finance models
- In the US, consumer marketplace lending continued to account for the largest share of market volume with $21 billion recorded in the US in 2016 (up 17 per cent).
- Balance sheet business lending became the second largest model in the US in 2016 with $6 billion originated, surpassing balance sheet consumer lending which had $3 billion.
- In Canada, donation-based crowdfunding remained the top alternative finance model with $105.9 million, but balance sheet business lending rose at a rate of 282 per cent to $103.3 million in 2016.
Businesses tapping alternative finance
- An estimated 218,188 businesses raised funds across the Americas from online alternative finance channels in 2016, led by the US with 143,344.
- A total of $9.2 billion in alternative business funding was raised in 2016, which is distributed largely to the US ($8.8 billion).
- Equity-based Crowdfunding reached $569.5 million.
- Over two-thirds (71 per cent) of Latin America/Caribbean online alternative business finance came from Chile ($97.1 million) and Mexico ($69.5 million).
There are plenty more fascinating statistics and anecdotes so I encourage you to download the full report here. It is critical to the health of the industry that well-researched papers like this be produced. It helps inform policy makers, regulators, associations and journalists and provides all of us with a sense of scale of the industry.
The Cambridge Center for Alternative Finance produce many reports like this one. In addition to the America’s report they have produced reports on alternative finance for the UK, Europe, Africa and the Middle East and China/Asia Pacific.