Crowdfunding and marketplace finance industry entering slight summer downturn, despite showing signs of long term growth

Emily Mackay, CEO TAB

The world’s first global Crowdfunding and Marketplace Finance Index (CAMFI) shows that the industry exhibited a slight downturn in July, dropping from 94.11 in June to 90.32 in July.*

CAMFI, a joint venture between crowdfunding analytics company,TAB, Zhejiang University AIF as academic adviser, Hangzhou JZTData Science and Technology Co., Ltd and BBD UK, educates public bodies, financial analysts, academics, SMEs and corporates, on the strength of the online finance industry. It provides a single point of reference for all participants in alternative finance who want to quickly and easily check the health of the market.

The INDEX is constructed using three main attributes that measure the market’s Scale (market volume), Efficiency (financing rate), and Transparency (information disclosure). It comprises of three component indices: Debt Sub-Index, Equity Sub-Index, and Reward Sub-Index, which together reflect the development of the global industry.

Key points

• The global crowdfunding and marketplace finance industry exhibited a slight downturn in July
• Segment-wise, the Reward Sub-Index was the major cause of the July decline
• Attribute-wise, the main declining driver was the market Scale measures
• Industry Scale continued to shrink, most evidently in the Reward segment
• Industry Efficiency improved significantly, with both Debt and Reward segments demonstrating growth
• Industry Transparency underwent no noticeable changes
• Debt has stayed relatively stable, which is expected given it is such a large and diverse market
• Equity has seen had a significant downturn in trading
• Rewards has had the biggest downturn, with significantly fewer campaigns, backers and amounts of money raised for each campaign during the July period

Speaking of the slight downturn, Emily Mackay, CEO of TAB, comments: “With the holiday season beginning it is not unexpected that June and July would be lighter months than May (which saw a grading of 101.49), with raises slowing up across the globe and in the northern hemisphere particularly. This also fits with the wider global economic picture.”

Despite the slight downturn demonstrated in June and July, data from TAB shows that the industry is growing rapidly year on year:

• In 2014, campaigners in the UK raised over $2 billion via crowdfunding platforms. In 2016, they raised over $3.96 billion.
• China is demonstrating huge growth, with companies raising $134 million via crowdfunding platforms in 2014. In 2016, they raised $2billion.
• France is also seeing significant growth, with companies raising $70 million in 2014, and $159 million in 2017 to date.
• In 2014, companies raised $5.4 billion in debt finance globally, increasing to $12.7 billion in 2016.
• In 2014, companies raised $345 million in equity finance globally, increasing to $766 million in 2017 to date.
• Rewards finance raised via crowdfunding globally has increased from $680 million in 2014 to $1.1 billion in 2016.
• The Real Estate industry raised $1.2 billion via crowdfunding in 2014. In 2016, it raised to $3.8 billion.
• The Capital Goods industry raised $751 million in 2014. This year to date, it has raised $1.4 billion.

Mackay continues: “Despite the slight downturn, the long-term health of the alternative finance market is looking very strong. While the UK and US have traditionally been the biggest players in the space to date, we are seeing huge growth across regions including China, Japan, France and Italy. We expect the growth of the last three years to accelerate over the next three.”

* CAMFI and its sub-indices fluctuate at around 100; more than 100 shows that the industry is in a state of health and expansion, less than 100 shows that the industry is in a state of contraction. The greater the index measure for the month, the greater the degree of health expansion of the industry.