Crowdfunding is a brand new invention. As these new, agile firms shape the market, they adapt and improve their business models in favour of what works for them and their customers.
Yesterday, we heard that RateSetter had entered into an arrangement with SyndicateRoom. The former is a lending platform, the latter, an equity crowdfunding platform. Under the agreement, the two alternative finance platforms will now refer their customers to one another, to provide a better service and meet more of the funding needs of new and growing businesses that are SyndicateRoom's and RateSetter's customers.
Ryan Weeks, writing in Alt-Fi, described the arrangement as 'a unique referrals partnership', but we hope it doesn't remain unique for for long. We see this as a positive move, and we'd like more industry players to consider collective approaches, in greater depth.
Our first reason for saying this is industry structure. There are relatively few direct competitors in the nascent industry. It certainly isn't Coke versus Pepsi; you can tell the difference because every crowdfunding and peer-to-peer lending has a different skill-set, different products, and has a different focus.
The second issue is demand versus supply. There are many small and medium sized enterprises with strong growth prospects in the UK, more than the alternative community can service, and a growing business is likely to rely on the services of different platforms at different stages of its journey.
the right mix of investors and talent to support SMEs at every stage of their development.
The size of the industry, and the size of the unmet need - which is called the"SME Funding Gap" - motivates us to call upon all firms involved in crowdfunding and SME investment to look the 'big picture' business opportunities for the whole of the sector to look at how best to meet the needs of British businesses, and bring in the right mix of investors and talent to ensure that startups, entrepreneurs and SMEs are supported at every stage of their development.
When we held our event at the Royal Autombile Clubl last October, a key segment of the afternoon was devoted to a panel discussion on 'New Solutions To Old Problems'. If you have twenty minutes to spare, and the inclination to discover why we're so optimstic, please watch the video, because we think you will might reasons to agree with us.
Investment crowdfunding - the thoughtful, transparent, rigorous application of real people's money to real people's problems - is only just getting started. We are planning more events, and the power of the crowd to transform SME funding, for the greater good of all, is going to be our focus.