INVESTORS could be set to benefit from another bumper year of equity fundraisings in the peer-to-peer lending sector.
P2P lenders raised more than £10m through crowdfunding platforms last year to boost their technology and operations, while almost £2bn was ploughed into the wider fintech sector.
P2P executives have said that the extra financial firepower offered by fundraising rounds benefits the sector’s retail investors, who can enjoy a better customer experience and greater reassurance in the firm handling their funds.
“2018 has seen nearly £2bn invested into private UK fintech and alternative finance companies – a record amount,” Henry Whorwood, head of research and consultancy at Beauhurst, said.
“39 fintech companies have used crowdfunding platforms to raise capital. This is a record level of crowdfunding investment into fintech companies and we expect to see more of this in 2019.”
Some of the largest P2P deals last year included Funding Circle’s £300m initial public offering, while Zopa raised £60m from a private fundraise, with more to come this year as it seeks to build a bank.
“Our main priorities into 2019 are launching our new banking products, such as the fixed-term de-posits, whilst also continuing to grow and improve our P2P business,” Jaidev Janardana, chief executive of Zopa, said.
“In 2019, we will be looking to raise additional capital to meet our regulatory requirements as we fuel the fast growth of our bank.”
Other platforms have chosen to go down the equity crowdfunding route. Landbay and Abundance raised £1.6m and £1.4m respectively on Seedrs last year, while Welendus raised £939,104.
Assetz Capital has raised more than £5m via Seedrs over the years and is now looking to raise £400,000 on the crowdfunding platform to finance the launch of a new P2P property venture.
“We may raise further equity next year,” Assetz Capital’s chief executive Stuart Law told Peer2Peer Finance News.
“A business with a strong balance sheet is a business that is worth investing through, as is dealing with one that is in profit.”
Tom Horbye, campaigns development manager for Seedrs, said that 12 P2P platforms raised funds through its platform in 2018, raising more than £10m, and predicted that the market is ripe for more campaigns in 2019.
“As seen in the latest update from the UK Peer-to-Peer Finance Association, the P2P lending market has continued to see strong growth, an attractive market signal for any growth equity investor,” he said.
“That coupled with the recent increase in the EU prospectus limit – which increased the threshold for when those raising funds have to produce a full prospectus – will likely see later-stage P2P lenders explore equity crowdfunding as a way to allow their loyal lending customers the opportunity to own a slice of the P2P platform they use, and share in the success of the P2P lending market’s growth.”
This article originally appeared in the January print edition of Peer2Peer Finance News. You can read the full issue here.