OFF3R Index

Record Breaking Month for the OFF3R Index

Written by James Mackonochie

RECORD BREAKING MONTH FOR P2P LENDING & EQUITY CROWDFUNDING


Earlier this month, the OFF3R Index was launched to help provide clarity to new and existing investors in the alternative finance sector. The main focus of the Index was on Equity Crowdfunding and P2P Lending.

The Index reported mixed fortunes for each asset class. P2P Lending continued to grow throughout the second half of the year. Perhaps, given the lowered interest rates as investors sought better returns. Equity Crowdfunding had been quite badly impacted by post Brexit uncertainties and was down on the strong performance from 2015. So, what did October bring and what impact will it have on the year to date data?

P2P LENDING LENDS OVER £2.3BN IN 2016 (Year to Date)


First up OFF3R have welcomed Assetz Capital to the Index. The addition of one of the leading P2P lenders is a real boost to the OFF3R Index data set following its successful launch last month.

P2P Lending continues to have a stellar second half of the year. The total lending of the 9 platforms that form the Index is now well over £2.3bn originated in 2016 with two months still to go.[1] October 2016 also broke the record for the most amount lent in a single month since records began of over £278 million, representing a 14% month on month increase from September.[2] This is a major shot in the arm for the industry, particular in a month when the SME bank referral scheme has also begun to take effect. The outlook is now very positive for the sector particularly as we are likely to start seeing more platforms issuing Innovative Finance ISA products in time for the end of the tax year.

The largest challenge on the horizon continues to be possible interest rate rises that are becoming a more realistic prospect in light of the inflation forecasts for 2017.[3] This could act to cool off investor levels in the space as some may turn back to traditional savings products if returns improve in that space.

P2P Index

Figure 1: Total Lent across 9 of the leading P2P Lending Platforms in 2016

EQUITY CROWDFUNDING GROWTH ACCELERATES IN TIME FOR CHRISTMAS


One of the key trends that we saw in 2015 was a powerful end to the year for the Equity Crowdfunding industry.[4] Data from October is indicating that we could see a similar finish to 2016. The total amount raised in October 2016 stands at over £25 million, a huge £18M increase from September’s figures.[5] This is the largest amount raised in a single month in 2016 showing that confidence is returning to the sector.

Crowdfunding IndexFigure 2: Total Raised across 7 of the leading Crowdfunding Platforms in 2016

October was buoyed by some very large campaigns with PerkBox raising over £4M with Seedrs.[6] The PerkBox campaign broke the previous record set by goHenry for a company raising through an equity crowdfunding platform in the UK. Seedrs‘ CEO Jeff Lynn commented:

“As the UK’s most active investor in private companies, Seedrs believes that equity crowdfunding is only at the beginning of its journey. Better education about alternative finance is becoming readily available. The early stage investment asset class continues to grow. We have always believed that, at scale, equity crowdfunding will see several billion pounds invested. Both in the UK and across Europe.”

OFF3R have also recorded strong activity on the leading platforms for November.  Consequently, we can expect to see strong figures when the next instalment of the index is released. All in all it is quite a rosy picture for equity crowdfunding as we approach Christmas.

James Mackonochie, OFF3R’s COO and Co-founder concluded that

“The October Index data really goes to show the resilience of equity crowdfunding. The demand for the asset class has returned following the post Brexit lull and things are looking up.

The P2P sector continues to be very hot and we are starting to see platforms like Zopa addressing this. Such as through temporarily putting on hold the onboarding of new investors. Things could evolve in the sector as we head in to the new year. Due to potential interest rate increases on the horizon… Watch this space”

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Sources
[1] Figure 1: Total Lent across 9 of the leading P2P Lending Platforms in 2016- OFF3R Partner Platform Data 2016
[2] Figure 1: Total Lent across 9 of the leading P2P Lending Platforms in 2016- OFF3R Partner Platform Data 2016
[3] Bank of England stages post-Brexit U-turn as it hikes growth forecast for 2017 and keeps interest rates on hold
[4] Pushing boundaries: the 2015 UK alternative finance industry report, February 2016
[5] Figure 2: Total Raised across 7 of the leading Crowdfunding Platforms in 2016 –OFF3R Partner Platform Data 2016
[6] Perkbox

About the author

James Mackonochie

James is the co-founder and COO at OFF3R. He has over 10 years of experience working in the City with a leading Management Consultancy. James holds a BSc degree in Business and Management and a number of professional qualifications.