Breaking New Ground (Report) Flashcards
U.S.
How much funding was generated through alternative online finance market in 2015?
$36.17bn
U.S.
Describe the growth in funding from the online alternative finance market over the past three years.
Funding via these lenders reached $36.17bn in 2015, up 213% from the $11.5b in 2014.
The 2014 figure is a 163% increase from the $4.40bn in 2013.
Define:
Alternative finance market
Instruments and channels of finance that emerge outside of the regulated banking system in both developed and developing economies.
Define:
Online alternative finance
A subset of the alternative finance market.
Specifically, they are technology-enabled online channels or platforms that act as intermediaries in the demand and supply of funding to individuals and businesses outside of the traditional banking system.
How can you distinguish between the various models of online lenders?
- the source of financing
- the use of proceeds provided by the financing
- instrument used to provide the financing
Who have taken it upon themselves to develop the taxonomy of alternative finance?
University of Cambridge and the Chicago Booth School
Name all the different types of online alternative finance models.
- Marketplace/P2P Consumer Lending
- Balance Sheet Consumer Lending
- Marketplace/P2P Business Lending
- Balance Sheet Business Lending
- Marketplace/P2P Real Estate Lending
- Reward-based crowdfunding
- Equity-based crowdfunding
- Real estate crowdfunding
- Donation-based crowdfunding
- Invoice trading
Which financing models are growing the fastest?
Invoice trading, balance sheet consumer, and marketplace/P2P real estate
U.S. and Canada.
Marketplace/P2P Consumer lending accounts for what percent of the overall online alternative lending market?
69%
Latin America and the Caribbean.
What drives the online lending market there? What share of their total market does this segment represent.
Marketplace/P2P business lending represents the largest share of the Latin American online alternative finance market.
56% of total
What factors (9) likely explain the success and proliferation of online alternative lending platforms in some regions over other?
Successful regions include those that:
- High comfort with online retail and e-commerce activities
- High smart-phone penetration
- Early adoption of alternative finance models
- investment climate that funds and supports technological innovation
- A culture of innovation in the financial services sector.
- Strong adoption of online/mobile banking
- Dissatisfaction with traditional banks
- Pent-up demand from unbanked and underbanked consumers and businesses
- A generally supportive political and regulatory environment.
In the US, where are most plaform lenders concentrated?
West and East
Mainly California and New York
U.S.
Growth in alt business financing over three years to 2015.
147%
U.S. alt business financing volumes in last three yrs…
$6.88bn in 2015, up from
$2.8bn in 2014, up from
$1.15bn in 2013
U.S. alt business lending model volumes in 2015?
Break it down by P2P and BS lenders…
$5.6bn in 2015
Of that, marketplace/P2P lenders accounted for the majority, posting volumes of $2.55bn in 2015.
BS lenders follow, having provided $2.25bn in 2015.
Invoice trading acct for $31.88m in 2015, but experienced the fastest growth of all.
What industries in the US are the biggest users of online alternative lending platforms?
- Construction
- Finance
- Business & professional services
- Technology
- Retail & wholesale
The US online marketplace caters predominantly to what segment?
Personal and consumer lending
What makes the US different from other countries in terms of the make up in lending from online marketplaces?
Countries in Europe, Latin America and Asia Pacific region have marketplaces that are predominantly focused on business lending.
How much financing was provided to consumers in 2015 via online lending platforms in the US? Both segments…?
$28.8bn total loans in 2015
$25.7bn came from marketplace/p2p lenders
$3.07bn came from balance sheet lenders
How much traditional credit was extended to consumers in 2015, according to the Federal Reserve consumer outflow data.
$230bn
What share of traditional credit creation do online lenders represent. How has that changed over the last three years.
12.5% in 2015
Up from 3.8% in 2014
Up from 1.65% in 2013
What makes the US different from other countries in terms of the make up of investors in online marketplaces?
The dominance of institutional investors.
Outside the US, marketplace/p2p models have higher proportions of individual lenders (retail investors)
In 2015, SME borrowers raised an average of $____ per business loan, funded by an average of # ____ investors.
$86k
16 investors
Balance sheet business lending increased from the $____ in 2014 by 102% to reach $_____ in 2015.
$1.11bn
$2.25bn
Balance sheet business borrowers raised an average of $____ per loan via this model.
$48K
The average loan size of marketplace/p2p real estate lending was $_____ in 2015.
$405k
Equity-based crowdfunding grew by 117% to reach $____ in 2015 from a base of $_____ in 2014. Fundraisers raised an average of $_____ per equity-based crowdfunding campaign, funded on average by #____ investors.
$590million
$270million
$960k
38 investors
Real estate crowdfunding in the US grew from $134 million in 2014 to a record $____ in 2015. For this model, the average number of investors per deal was #_____.
$470million
66 investors
Online alternative finance platforms in the US are subject to federal laws covering _____, ______, and _______.
Credit, privacy, and money laundering.
When was the JOBS Act signed into law?
2012
When was Title III approved?
2015
Why is Title III critical to crowdfunding startups?
It allows both accredited and non-accredited investors to invest through platforms.
