The Current State of Crowdfunding in the United Kingdom
What is the current state of crowdfunding in the UK? This year, based on the British crowdfunding market performance in 2020, CrowdfundingHub has carried out the research on the analysis and the information regrouping of the crowdfunding market in the United Kingdom.
In the first semester of 2020, the British crowdfunding market has collected £103 million in total, resulting in a 25,4% decrease as compared to the second semester of 2019. The British market has raised £230,4 million in 2019, but unfortunately, the data of market volume of the second semester of 2020 is not yet accessible.
Seedrs was the platform that collected the highest volume during the first semester of 2020, reaching £49,7 million. Crowdcube closely followed Seedrs, raising £48,5 million. The collected amount was shared among different targeted companies. 70% of the collected money was for consumers, 35% for business, followed by 5% for the public sector and 1% for other sectors.
Equity-based crowdfunding was the leading segment of the 2020 crowdfunding market in the UK. Equity-based crowdfunding has reached a new record this year, funding 433 campaigns and raising £332 million.
Crowdcube conducted all the record-breaking campaigns: The company had the largest campaign by capital, which reached £11 million. The campaign with the most investors engaged 16.735 funders. The largest campaign in terms of pre-money valuation was valued at £150 million.The majority of the capital was raised via Crowdcube (50%) where 7 of the top 10 largest campaigns took place.
Seedrs raised 44% of the total capital and 6% was raised through other platforms. The two main platforms raised a similar number of campaigns – 48% on Seedrs, 47% on Crowdcube and 5% on other platforms.
In addition, 47 campaigns altogether raised £62 million in conjunction with the UK government’s Future Funds. 85% of the Future Funds were listed on the Seedrs platform, raising 71% of the aggregate capital. In 2020, London has by far collected the most equity-based funds – 47% of the campaigns and 54% of the raised capital took place with the help of London-based companies. The two cities that followed closely behind are Edinburgh and Cambridge.
Lending-based Crowdfunding & Impacts of COVID-19
A total funding volume of €5,1 billion was recorded in Peer-to-Peer lending-based market in 2020, including:
- €3,2 billion funded in the main tracked currency – Euros;
- £1,2 billion (approx. €1,3 billion) funded in Great Britain Pounds;
- €595 million worth of loans financed in other currencies.
The funding volume in 2020 decreased by 35,4% as in 2019. Across all currencies, the volumes were much lower than in 2019. However, funding in Great Britain Pounds and other currencies declined much more drastically, dropping below 2016 and 2018 levels, respectively. Total recorded funding remained on a decent level mainly thanks to a relatively better performance of the euro-market, accounting for more than half of the total funding volume.
As the first wave of COVID-19 hit and lock-downs were administered, the market saw the largest retreat from P2P lending assets in the sector’s short history. In April, the funding volume was less than a third of that recorded in January. The good news is that lenders and borrowers have been returning, albeit slowly, and even the subsequent COVID and lock-down waves did not alter funding volumes drastically. By the end of the year, monthly funding volume was already almost two-thirds of that at the beginning of the year.
Investors’ sentiment has experienced considerable changes in 2020. They preferred low-risk, low-return investments: a retreat to safer assets is a natural move when uncertainty and crisis kick in. Also, investors chose national platforms over platforms that are based in other countries.
The year 2020 also brought about some significant shifts in the market structure: continental Europe strengthened its leading position, especially in contrast to the declining UK market. Many investors moved away from big international consumer lending sites to more specialised real estate and business financing platforms. Another shift to safer P2P assets was also profound.
Download the report HERE for more detailed research result.