Slight summer downturn for alternative finance
ALTERNATIVE finance experienced a slight downturn over the summer, but the sector remains strong overall, according to new data.
The Crowdfunding and Marketplace Finance Index (CAMFI) found that the marketplace contracted slightly over the summer, dropping to 90.32 in July, from 94.11 in June, and 101.49 in May. Any figure under 100 represents a slowing in the sector’s growth.
“With the holiday season beginning it is not unexpected that June and July would be lighter months than May, with raises slowing up across the globe and in the northern hemisphere particularly,” said Emily Mackay (pictured), chief executive of the crowdfunding analytics company TAB, which helps to manage the index. “This also fits with the wider global economic picture.”
It is believed that a slowdown in the ‘Reward Sub-Index’ was behind July’s lower figures. CAMFI said that this was due to “significantly fewer campaigns, backers and amounts of money raised for each campaign during the July period”. Debt values and transparency measures remained relatively unchanged.
However, CAMFI stated that there was evidence that the alternative finance industry remains strong, particularly in China. In 2014, companies raised $134m (£103.41m) via crowdfunding platforms in China, but by 2016 that figure had risen to $2bn.
Likewise, in the UK campaigners raised more than $2bn throughout 2014 for crowdfunding platforms, compared with $3.96bn in 2016.
In 2014, global companies raised $5.4bn in debt finance, which increased to $12.7bn in 2016. And reward finance has increased from $680m in 2014 to $1.1bn by the end of 2016.
“Despite the slight downturn, the long-term health of the alternative finance market is looking very strong,” added Mackay. “While the UK and US have traditionally been the biggest players in the space to date, we are seeing huge growth across regions including China, Japan, France and Italy. We expect the growth of the last three years to accelerate over the next three.”
CAMFI is a joint venture between TAB, Zhejiang University AIF, Hangzhou JZTData Science and Technology, and BBD UK. It was launched earlier this year with a remit to measure the global growth of the crowdfunding and alternative finance industry in terms of scale, efficiency and transparency.