We believe crowdfunding has the potential to materially impact banking market share in the next 20 years. Tapping the massive capital and higher risk tolerances of institutional and individual investors, these platforms will provide funding to segments currently underserved by traditional lenders (e.g., small and micro businesses).
We’ve written extensively about the consumer debt-based crowdfunding, which we’ve called P2P, or peer-to-peer, lending (note 1). Now, we turn to the new crop of startups arranging funding for small businesses and startups.
The report covers the three variations that promise financial returns to investors (note 2):
- Debt-based financing (crowdlending)
- Equity-based funding (crowdinvesting)
- Receivables-based funding (crowdfactoring)
Sixteen crowdfunding platforms are profiled, eight in the United States and eight in the United Kingdom:
- Abundance Generation
- Funding Circle
- Market Invoice
Finally, we look at specific opportunities for retail banks to leverage the new technology.
About the report
Crowdfund Investing Platforms: Debt & Equity (link)
Payments in the smartphone era
Author: Andy Davis, U.K. Financial writer
Editor: Jim Bruene, Editor & Founder
Published: 21 Feb 2013
Length: 68 pages, 24,000 words, 5 tables
Cost: No extra charge to OBR subscribers, US$495 for others (here)
1. We have published three reports in this area (OBR 127 in 2006, 148/149 in 2007, and SR-5 in 2009). In addition, we’ve created a 10-year forecast for U.S. P2P lending in each of our last six year-end reports.
2. We do not cover the donation or rewards models, such as Kickstarter. While those are effective ways for businesses to raise money and/or visibility for new products, they have fewer parallels and opportunities for retail banks.