An extensive look across all markets, with insights into what's driving growth. At Grow Advisors, we are experiencing interest from incumbents and startups alike and foresee growth accelerating in the near term.
Here are some highlights:
France, Germany and the Netherlands are the top three countries for online alternative finance by market volume in Europe, excluding the United Kingdom. The French market reached €319m in 2015, followed by Germany (€249m), the Netherlands (€111m).
The Nordic countries collectively pulled in €104m, while Eastern & Central European countries registered a total of €89m. The UK still dominated the European online alternative finance landscape, increasing its overall market share of Europe to 81% in 2015 with €4,412m.
Estonia ranked first for alternative finance volume per capita with €24 followed by Finland (€12) and Monaco (€10) outside of the United Kingdom. Estonia was also ranked first by market volume per capita in 2014 (€17). This year, Latvia (€7.68) and the Netherlands (€6.53) ranked 4th and 5th respectively, replacing Sweden and France in the top five.
Peer-to-peer consumer lending is the largest market segment of alternative finance, with €366m recorded for 2015 in Europe. Peer-to-peer business lending is the second largest segment with €212m, with equity-based crowdfunding in third with €159m.
However, invoice trading is the fastest-growing alternative finance model in Europe registering €81m in 2015, up significantly from the low base of just €7m in 2014.
Institutionalisation took off in mainland Europe in 2015 with 26% of peer-to-peer consumer lending and 24% of peer-to-peer business lending funded by institutions such as pension funds, mutual funds, asset management firms and banks. 8% of the investment in equity-based crowdfunding was also funded by institutional investors such as venture capital firms, angels, family offices or funds. Excluding the UK, 44% of the surveyed European platforms reported some level of institutional funding in 2015 and just under 30% of peer-to-peer consumer lending platforms reported having a majority institutional shareholder (e.g. a VC, corporate or a bank).
There is now a high degree of automation in peer-to-peer lending with 82% of consumer loans, 78% of traded invoices (i.e. receivables) and 38% of business loans now funded by automatic selection or automatic bidding processes on European alternative finance platforms.
The average deal size in equity-based crowdfunding is now approximately €459,000, in contrast to just under €100,000 for peer-to-peer business loans and just under €10,000 for peer-to-peer consumer loans. Real-estate crowdfunding has the second largest average deal size with approximately €370,000, - a new model recorded in 2015.
There were interesting perceptions across Europe regarding regulations in alternative finance. 38% of surveyed platforms felt their national regulations for crowdfunding and peer-to-peer lending were adequate and appropriate. Nevertheless, 28% of surveyed platforms perceived their national regulations to be excessive and too strict, with a further 10% stating that current regulations were too relaxed. When it came to proposed national regulations, however, 47% of the surveyed platforms perceived them as adequate and appropriate.
Despite the significant growth, there are risks, and the report highlighted the following:
The biggest risks perceived by the alternative finance industry are increasing loan defaults or business failure rates, fraudulent activities or the collapse of platforms due to malpractice.
Grow Advisors, Asia Pacific
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Grow Advisors is proud to support the transition to digital finance around the world. Our team offers consulting and professional services on online asset and wealth management solutions, lending and p2p, crowd investing and fund raising around the world. We are uniquely placed to cover both planning and executional aspects of all our ideas.