Tuesday

19th Nov 2019

Crowdfunding and alternative finance to top €7bn, new research finds

  • Crowdfunding could be worth €7bn across the EU in 2015, according to research by Cambridge university. (Photo: Ken Teegardin)

Alternative online finance methods such as crowd-funding and peer-to-peer loans could top €7 billion across the EU in 2015, according to a report published Monday (23 February).

The sector grew by 144 percent last year to nearly €3 billion in 2014 and, having averaged growth of 115 percent over the past three years, should more than double this year, says the report by the Judge Business School at the University of Cambridge.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 year's of archives. 30-day free trial.

... or join as a group

In relative terms, the sector remains small compared to traditional banking but is increasingly being used by small businesses and start-ups who struggle to access loans from banks who remain reluctant to increase lending.

Robert Wardrop, co-author of the report and executive director at Judge’s Centre for Alternative Finance, said “alternative finance, at least in some European countries, is on the cusp of becoming mainstream”.

The report estimates that nearly 10,000 European start-ups and small firms have benefitted during the last three years, most of them in the UK, which is Europe’s centre for alternative finance.

The UK accounted for €2.34 billion of the market in 2014, followed by France and Germany on €154 million and €140 million respectively.

The report’s authors estimate that their research covers around 90 percent of Europe’s online alternative finance market.

Peer-to-peer lending by consumers and business accounted for €368 million in 2014, while €203 million was raised through crowdfunding, which has become the most well-publicised form of alternative finance.

It usually involves open calls through the internet to the public to finance specific projects through lending, investment or donations, using an intermediary who charges a fee for driving interest in the project or business.

In March 2014, the EU executive published a paper highlighting crowdfunding’s potential as a source of business finance, and has set up an expert group to explore whether it can be regulated.

Steven Maijoor, chairman of the bloc's securities and markets watchdog, warned last December that common EU regulation was needed to protect investors in alternative finance schemes.

Last week the European Commission launched plans to harmonise Europe’s capital markets to make it easier for companies to raise money from the stock, bond and debt securities markets.

The Association of Financial Markets in Europe, meanwhile, in a report Monday warned that a shortage of risk capital and under-developed capital markets are holding back growth on the continent.

Fragmented markets, the EU’s economic weakness and differing national rule-books were cited by investors as the main barriers to investment.

EU unveils plan to copy US capital markets model

The European Commission set out a road-map to emulate the US venture capital markets on Wednesday, in an attempt to make it easier for companies to raise money from the stock and bond markets.

EU to unveil capital markets plan in 2015

The EU commission will unveil plans to harmonise the bloc's capital markets in 2015 and reduce the reliance of Europe's businesses on bank lending.

AI skewed to young, male, and western EU, report warns

A new study reveals the current market ecosystem for artificial intelligence (AI) in Europe is uneven across both gender and demographic lines - raising new demographic concerns for the incoming AI legislation of the new commission.

EU agrees 2020 budget deal

EU governments and the parliament agreed in marathon talks ino next year's budget - which will boost spending on climate, border protection, and the European satellite system. It will also be a benchmark if there is no long-term budget deal.

Magazine

EU diplomacy 2.0

MEPs on the foreign affairs committee ought to be like second-tier EU diplomats on the Western Balkans and Russia, according to its German chairman, but foreign policy splits could bedevil its work.

News in Brief

  1. Hungary, Poland block EU conclusions on rule of law
  2. France: wide EU backing for enlargement change
  3. EU Council calls for policy action to protect marine life
  4. ECJ: Poland's judicial independence in doubt
  5. Suspected 'middleman' in Caruana Galizia case arrested
  6. European populists more favourable to Russia
  7. Hungary's new commissioner approved by MEPs
  8. Balkan coal power plants fail to meet emissions targets

Magazine

Welcome to the EU engine room

Welcome to the EU engine room: the European Parliament (EP's) 22 committees, which churn out hundreds of new laws and non-binding reports each year and which keep an eye on other European institutions.

Stakeholders' Highlights

  1. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  2. Nordic Council of MinistersNordic Climate Action Weeks in December
  3. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  4. Nordic Council of MinistersBrussels welcomes Nordic culture
  5. UNESDAUNESDA appoints Nicholas Hodac as Director General
  6. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  7. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  8. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  9. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  10. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  11. Nordic Council of MinistersNo evidence that social media are harmful to young people
  12. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021

Join EUobserver

Support quality EU news

Join us