Peer-to-business crowdlending for investors
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This document is a report summarizing benchmarks and trends in peer-to-business (P2B) crowdlending in 2014. Some key findings include: over 75% of high net worth individuals had used or were open to using crowdlending; over half of lenders typically invest between £5,000-£20,000 per year; and trusting the business owner was twice as important a factor for women investors compared to men. The report is based on a survey of 238 high net worth individuals in the UK.
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Peer-to-business crowdlending for investors
- 1. P2B Crowdlending for Investors: Benchmarks and trends report | 2014 www.fundingknight.com
- 2. Introduction. So far 2014 has been a huge year for alternative finance after FCA regulation and the prospective introduction of ISA’s. As we move swiftly the latter stages of the year it’s a good time to take a look at the stats and trends of peer-to- business (P2B) crowdlending to give us an idea of the behaviours and attitudes within this expansive market. SME borrowers are flocking to P2B crowdlending platforms as a reliable alternative that gives access to the funds required for growth. The speed of such platforms allows agile businesses to remain profitable whilst managing the funding process. This luxury could not be accredited to high street banks who typically prolong a loan transaction with their strict criteria. Early adopters amongst lenders are enjoying the Page 1 rewards of P2B crowdlending by making frequent transactions on these platforms, whilst many are still learning of how their extra funds can be put to good use. 54% of people are constantly looking for new ways to invest, P2B crowlending adds another dimension to an investment portfolio. One that allows lenders to benefit from an improved rate of interest whilst supporting SME’s in the UK. www.fundingknight.com
- 3. Percentage of HNW’s that would use P2B crowdlending. 79% Page 2 Using and enjoyed – 48% Would consider – 27% Not now but wouldn’t rule it out – 25% [None of the respondents claimed they would never use crowdlending] of high net worth (HNW) individuals have used, or would consider using, crowdlending. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014
- 4. P2B Crowdlending Page 3 Yes – 56% Neither – 36% No – 8% www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 Percentage of HNW’s interested in new technology. 53% New technology offers new opportunities for business say 53% of HNW’s.
- 5. Page 4 Men 49% 12% 39% Women 56% 12% 32% Yes No Neither 57% of investors take risks to achieve higher returns. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 Who takes risks when investing with P2B crowdlending. 50% Just under 50% of HNW’s take risks in investing because they like the thrill.
- 6. P2B Crowdlending Page 5 All personally managed - 21% 3% of lenders are very unconfident with their personal economic situation. Investment manager – 66% Both - 21% Other – 2% www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 How investments are managed?
- 7. Page 6 Men 52% 33% 10% 5% 0% Women 9% 33% 17% 9% 4% 37% of lenders claim their previous business experience influences their investment decision. Children Pension Living Expenses Reinvesting Business 45% of lenders put their investment returns into their children’s future. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 How investment returns are allocated?
- 8. Page 7 £20,072 The amount men invest per year on average. £0- £2,000 2% £2,000- £5,000 2% £5,001- £10,000 50% £10,001- £20,000 31% £20,001- £30,000 7% £30,001- £40,000 5% £40+ 3% 62% of lenders won’t change the amount they invest. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 The amount HNW’s typically invest per year in £.
- 9. Page 8 £30,000- £49,000 The amount most P2B crowdlenders have available to invest. £20,000- £29,999 £30,000- £49,999 £50,000- £74,999 £75,000- £99,999 £100,000- £199,999 £200,000 - £499,999 £500,000+ £10,000- £19,999 100% 50% 30% 20% 10% 0% 85% more women have available funds in the £200,000 - £499,999 bracket. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 The funds available to investors.
- 10. Page 9 Previous profitability - 28% A trustworthy businessman - 24% A good idea - 17% Ability to review accounts – 16% External Factors - 13% Other - 1% Trusting the business owner Don’t know - 1% is twice as important for women as it is for men. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 What a lender looks for in an SME seeking finance.
- 11. Page 10 Senior management – 45% Intermediate management – 28% Junior management – 18% Manual worker – 8% Other – 1% A borrower demonstrating previous profitability is most important to a lender. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 The profession of HNW’s.
- 12. Page 11 Sometimes – 60% Not at all – 26% All the time – 14% 33% of men invest as they want to make more from the money they’ve accrued to date. 10% of women invest as they like to put something back into the community. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 How often investments are used to explore unfamiliar industries.
- 13. The crowd. P2B Crowdlending: Benchmarks, trends and behaviours 2014 was produced by FundingKnight with support from One Poll. This report is part of an ongoing quarterly feature that aims to provide the industry, existing and new lenders, insights into the way people engage with P2B crowlending platforms. The industry is experiencing rapid growth and therefore the landscape can experience frequent change. With this report we can keep our finger on the Page 12 pulse of behaviours and attitudes with an overview of how those who make up the ‘crowd’ feel about it. A total of 238 recipients from around the UK representing high net worth individuals from a range of industries and experience with crowdlending responded to the survey. This data was collated at the end of 2013. www.fundingknight.com P2B Crowdlending for Investors: Benchmarks & Trends Report I 2014 Description of the business Supplier of complete home automation systems Sport and athletics facility providing sporting opportunities to the local community Provider of commercial buildings to private and public sector Purpose of funding Increase sales support Funding for business expansion Contract fulfilment Loan amount £40,000 £50,000 £100,000 Shield rating Avg rate of interest achieved by investors 11.35% 10.72% 10.97% Here’s an example of three live auctions that recently closed on our platform.
- 14. We are FundingKnight Start investing in British businesses today and enjoy higher interest rates with P2B crowdlending. REGISTER NOW TO INVEST www.fundingknight.com Risk Warning Investment through the FundingKnight lending platform involves making direct loans to companies. You could lose all or part of your capital. Selling loan parts through our Loan Exchange is on a matched basis; there is no guarantee that sale offers will be purchased. Indicated returns, unless otherwise stated, are shown before any provision for bad debts and may be subject to tax. We advise all investors through the platform to spread their investments widely and thus avoid concentration risk.