Crowdfunding is a serious business. But it’s not taken quite so seriously as it might be – or as it will be. That’s the essence of a fine piece of commentary by David Prosser in The Independent.
The crowdfunding market and the language used to describe it has evolved rapidly, even in the eight months that Money&Co. has been trading. Money&Co. brings people and businesses together in what is, technically, the business-loan, peer-to-peer sector of the crowdfunding market. All that really means is that you can use the website as a bridge to getting good returns from lending to companies that have passed our rigorous credit-analysis process. See this short video below, which explains how it all works.
Here’s The Independent’s take on the market: “Despite phenomenal growth in crowdfunding over the past three years – funds raised in 2014 were up 161 per cent – the sector is still not widely seen as a genuine rival to mainstream financiers of smaller businesses. Private equity and venture capital firms, in particular, are relaxed about the threat crowdfunding poses, because individual deal sizes have been modest.
“That may soon come to look complacent, for crowdfunding has reached the scale it needs to finance much larger transactions…
“Peer-to-peer lending has had successes too – a residential housing project in London picked up £4.1 million on the LendInvest platform last year.
In fact, the list of large deals in the UK is growing all the time.”
“These sort of transactions are of a size to rival the bottom end of the private equity and venture capital sector. And crowdfunding remains a relatively immature and under-developed sector. Not only will there be more large deals done in the months and years ahead, but the deals will keep getting larger. In the US, for example, the biggest crowdfunding deal ever raised more than $13 million (£8.6 million) last year.”
It’s worth noting that Money&Co.’s loans tend to be much larger than most P2P loans. The average loan size is over £300,000, and we were the first to make a non-property-backed P2P loan of £1 million, described by the Financial Times as a “landmark” deal.
David Prosser concludes with an optimistic view of the market’s future: “That assumes, of course, that the platforms are able to raise sufficient sums to lend or invest in the larger deals. There is reason to be confident: the supply of funding has kept pace with demand, and government support for the sector (through direct assistance, tax breaks and the inclusion of peer-to-peer lending in the individual savings account regime) should be an impetus for growth.”
*** Don’t miss the loan offering from the Yorkshire-based credit-control company – closing in five days time, and now 92 per cent funded. After going through our rigorous credit-analysis process, this company was given a B rating, and the current gross indicative yield is just over 11 per cent. See Home or Lend pages for more. The risks of lending are explained in greater detail here.