The future of SME finance

1. Ronald Kleverlaan
Director European Centre for Alternative Finance Utrecht University
ronald@kleverlaan.com || @kleverlaan || http://www.uu.nl/ecaf
Future of Finance
Alternative Finance trends and main obstacles for growth
ACCIÓ, Barcelona - Alternative Finance trends - 19-11-2019 @kleverlaan || www.altfinance.eu

2. Global market Alternative Finance - USA (10%) China (87%)
Source: 4th EU Alternative Finance Industry Report (2019), Cambridge Centre for Alternative Finance
@kleverlaan || www.altfinance.eu

3. Alternative Finance in Europe €10 billion (2017)
Source: 4th EU Alternative Finance Industry Report (2019), Cambridge Centre for Alternative Finance
@kleverlaan || www.altfinance.eu

4. Source: Expanding Horizons, The 3rd European Alternative Finance Industry Report (2016), Cambridge Centre for Alternative Finance
Market volume per capita
@kleverlaan || www.altfinance.eu

5. Source: 5th UK Alternative Finance Industry Report (2017), Cambridge Centre for Alternative Finance
29% of financing for small SMEs by AltFin (UK)
@kleverlaan || www.altfinance.eu

6. Alternative Finance
20+ different new financing solutions and 100s of providers
@kleverlaan || www.altfinance.eu

7. Traditional Finance
@kleverlaan || www.altfinance.eu

8. Alternative Finance
Online
Leasing
Online
Factoring
P2P business lending Equity
crowdfundingSocial Impact Bonds
Real-estate lending
Business angels
Debt based
securities
STO/ICORevenue sharing
@kleverlaan || www.altfinance.eu

9. P2P/Marketplace business lending
@kleverlaan || www.altfinance.eu

10. Funding Circle
£4,2 billion – 42.000 companies
@kleverlaan || www.altfinance.eu

11. Crowdfunding
Community of investors
@kleverlaan || www.altfinance.eu

12. Crowdfunding = Community Funding
An involved community providing more then money
@kleverlaan || www.altfinance.eu

13. Brewdog – Equity Crowdfunding
£25 million in equity - 42,000 investors – 5 rounds
@kleverlaan || www.altfinance.eu

14. Monzo
Crowd & VC co-investment
• 2016 - £7 million (VC) + £1 million (Crowd)
• 2017 - £22 million (VC) + £2,5 million (Crowd)
• 2018 - £85 million (VC) + £20 million (Crowd)
(valuation 40x higher then 2016)
@kleverlaan || www.altfinance.eu

15. @kleverlaan || www.altfinance.eu

16. Bigger/traditional companies using crowdfunding
Fragmented financial landscape with specialized financial
suppliers
Co-funding and multiple funding rounds
New independent “trusted advisors” support companies
Citizens and government will work together on societal
challenges
Future of crowdfunding
@kleverlaan || www.altfinance.eu

17. Not just for start-ups
and small companies
@kleverlaan || www.altfinance.eu

18. Philips
€6 million for new product introduction
@kleverlaan || www.altfinance.eu

19. BD Bacata (Colombia)
$150 million by 3.000 retail investors
@kleverlaan || www.altfinance.eu

20. Multiple funding rounds
@kleverlaan || www.altfinance.eu

21. Pebble watch
$10,3 million by 68,929 backers
@kleverlaan || www.altfinance.eu

22. $10,3M
$20,3M
$12,8M
@kleverlaan || www.altfinance.eu

23. Societal challenges:
- Energy transition
- Local food production
- Social housing
- Cleaner and greener cities
@kleverlaan || www.altfinance.eu

24. 24
Energy Transition
Challenges: NIMBY, high-risk pre-financing, profits external partners

25. 25
Windfarm Nijmegen-Betuwe
1.076 local investors for € 18,5 million windfarm

26. 26
United Downs
£5,2 million crowd investment

27. Social housing
Local food production
Challenges: small scale projects, sales for farmers

28. 28
Herenboeren
200 local citizens invest €2.000 each to start and own their own farm

29. 29
Social housing
Challenges: bottom-up projects difficult to finance

30. 30
Knarrenhof
Small groups of elderly people co-finance local private+social housing

31. 31
Nature based solutions for urban sustainability goals
Challenges: alternative business models and non-financial returns

32. 32

33. 33

34. Immature and young alternative finance eco-system
Good financial regulation for Alternative Finance
Lack of knowledge about Alternative Finance at
entrepreneurs and companies
Lack of knowledge about Alternative Finance at SME
financial advisors
Biggest obstacles for growth
@kleverlaan || www.altfinance.eu

35. Market Government
Source: Current State of Crowdfunding in Europe 2016 – Alternative Finance Maturity Index
@kleverlaan || www.altfinance.eu

36. It takes
two to
tango
@kleverlaan || www.altfinance.eu

37. Introduction
Growth
Competition
Consolidation
Maturity
Alternative Finance Maturity Model (5 phases)
@kleverlaan || www.altfinance.eu

38. Immature and young alternative finance eco-system
Good financial regulation for Alternative Finance
Lack of knowledge about Alternative Finance at
entrepreneurs and companies
Lack of knowledge about Alternative Finance at SME
advisors
Biggest obstacles for growth
@kleverlaan || www.altfinance.eu

39. Government/regulator
Investor protection vs Access to Finance
Professionality of new industry players
European vs National Regulation
UK & German market up to €8m campaigns
Experiment with sandboxes
@kleverlaan || www.altfinance.eu

40. Introduction
Growth
Competition
Consolidation
Maturity
Alternative Finance Maturity Model (Government)
Open dialogue with
industry
Create clear regulations
+ public support
Investor protection +
transparency on
defaults
Integrated completely in
financial regulations
@kleverlaan || www.altfinance.eu

41. Immature and young alternative finance eco-system
Good financial regulation for Alternative Finance
Lack of knowledge about Alternative Finance at
entrepreneurs and companies
Lack of knowledge about Alternative Finance at SME
advisors
Biggest obstacles for growth
@kleverlaan || www.altfinance.eu

42. Industry
Promotion and Education
Educational programs for Entrepreneurs,
Investors and Advisors.
Independent Research on industry data
Transparancy on defaults, risks
Certification program for
platforms and advisors
Co-financing by government and banks
@kleverlaan || www.altfinance.eu

43. Introduction
Growth
Competition
Consolidation
Maturity
Alternative Finance Maturity Model (Industry)
Industry roundtables
and work with
independent advisors
Collective promotion of
success stories. Regular
publications of growth
in industry. Training
advisors. Launch
industry association
Support independent
(academic) research,
certification of advisors,
transparency on defaults,
several industry associations,
combine AltFin with
traditional finance
Integration in traditional
(institutional) finance
industry, specialized
(academic) research centre.
@kleverlaan || www.altfinance.eu

44. Immature and young alternative finance eco-system
Good financial regulation for Alternative Finance
Lack of knowledge about Alternative Finance at
entrepreneurs and companies
Lack of knowledge about Alternative Finance at SME
advisors
Biggest obstacles for growth
@kleverlaan || www.altfinance.eu

45. Alternative Finance in Europe is growing rapidly
Fragmented financial landscape
New group of independent “trusted advisors”
Alternative Finance market needs to become more
mature
Conclusions
@kleverlaan || www.altfinance.eu

46. Ronald Kleverlaan
Director European Centre for Alternative Finance Utrecht University
ronald@kleverlaan.com || @kleverlaan || http://www.uu.nl/ecaf
Future of Finance
Alternative Finance trends and main obstacles for growth
ACCIÓ, Barcelona - Alternative Finance trends - 19-11-2019 @kleverlaan || www.altfinance.eu

47. http://www.altfinance.eu
Weekly Alternative Finance newsletter
@kleverlaan || www.altfinance.eu

48. Digital Business Angels
@kleverlaan || www.altfinance.eu

49. Social Impact Bond
Outcome payment by government
@kleverlaan || www.altfinance.eu

50. SME factoring
Sell individual invoices
@kleverlaan || www.altfinance.eu

51. Profit sharing
Receive % of future profits
@kleverlaan || www.altfinance.eu

52. STO/ICO
Security token offerings – digitized stocks
@kleverlaan || www.altfinance.eu

53. Smart (energy) contracts
Raise funding upfront for future (energy) usage
@kleverlaan || www.altfinance.eu