February 2016Bryan Zhang, Peter Baeck, Tania Ziegler, Jonathan Bone and Kieran GarveyIn partnership withPUSHING BOUNDARIES THE 2015 UK ALTERNATIVE FINANCE INDUSTRY REPORTwith the support ofCONTENTSForewordsIntroductionAbout this studyThe Size and Growth of the UK Online Alternative Finance MarketMarket Size and Growth by Alternative Financing ModelsIncreasing Share of the Market for Business FundingMarket Trends in Alternative FinanceExpanding Base of Funders and FundraisersMarket Entrants and Partnership strategiesSeeking Growth Through Awareness, Increased Marketing and Forging PartnershipsInstitutionalisation of the MarketCross-Border Transactions and InternationalisationThe Geography and Industries & Sectors of Alternative FinanceIndustry Perspectives on Regulation, Tax Incentives and RisksSize and Growth of the Different Online Alternative Finance ModelsPeer-to-Peer Business LendingPeer-to-Peer Business Lending (Real Estate)Peer-to-Peer Consumer LendingInvoice TradingEquity-based CrowdfundingEquity-based Crowdfunding (Real Estate)Reward-based CrowdfundingCommunity SharesDonation-based CrowdfundingPension-led FundingDebt-based SecuritiesConclusionAcknowledgementsEndnotes0410121314192223252627303133383940414243444546464747485051JONATHAN BONEJonathan Bone is a researcher at Nesta, where he focuses on innovation and economic growth with a specif_ic focus on alternative f_inance and start-ups.TANIA ZIEGLERTania Ziegler, Research Programme Manager, Cambridge Centre for Alternative Finance, Cambridge Judge Business School. Her research interests include small business economics and SME utilization of alternative funding models.BRYAN ZHANGBryan Zhang is a Director of the Cambridge Centre for Alternative Finance and a Research Fellow at the Cambridge Judge Business School. He has co-authored f_ive industry reports on alternative f_inance.KIERAN GARVEYKieran Garvey, Policy Programme Manager, Cambridge Centre for Alternative Finance, Cambridge Judge Business School. His research interests include the application of alternative f_inance within developing countries, renewable energy and early stage ventures.PETER BAECK Peter Baeck is a researcher at Nesta, where he focuses on crowdfunding, peer-to-peer lending and the role of digital technologies in public and social innovation. ABOUT THE AUTHORSSPECIAL THANKSThe Cambridge-Nesta research team would like to thank Robert Wardrop, Stian Westlake, Christopher Haley, Raghavendra Rau and Mia Gray for their feedback and guidance throughout the study. We could not have completed the study without the support from Alexis Lui and John Burton who have been instrumental in analysing and visualising data.We are also grateful for the help and support from Warren Mead, Sarah Walker, Pete Shepherd, Audrey King and their brilliant team at KPMG in the UK. We would also like to thank Christine Farnish and Sam Ridler from the P2PFA, Julia Groves from the UKCFA, as well as Janine Hirt and Julia Morrongiello from Innovate Finance.The Cambridge Centre for Alternative Finance wishes to thank CME Group Foundation and DFC Global for their generous donation towards our research endeavours.3ROBERT WARDROP Executive DirectorSTIAN WESTLAKE Executive Director of Policy and ResearchThis years online alternative f_inance industry report follows its predecessors with a title ref_lecting the evolutionary state of an industry having a growing impact on the UK economy and the society in which we live. The Rise of Future Finance in 2013 described the size and scale of a new channel of f_inance emerging from outside of the traditional banking system. In 2014, Understanding Alternative Finance, analysed the surging participation of individuals and businesses both funding and fundraising. This years report, Pushing Boundaries, ref_lects an industry that is coming of age, increasing its engagement with traditional institutions while speeding up its own pace of innovation.Pushing boundaries is associated with positive change and innovation. Pushing some boundaries, however, puts trust at risk. The growth of the industry to date attests to the trust placed in platforms by many funders, fundraisers, policy makers and the general public. Many tests of this trust are to come, and the outcomes will shape the industrys growth trajectory and institutional relevance within the f_inancial system. Tellingly, the platforms themselves recognise that the greatest risks to the continued growth and development of the industry are not increased regulation or changes to tax incentives, but events related to their own conduct: malpractice or a cyber security breach.Each years industry research seeks to provide insights into questions raised in our previous reports. Last year, for example, we noted the arrival of institutional investors, and this years study analyses the scale and growth of their activity. Our aim is to continue this cycle of insightful analysis, as we believe that this years report inv