New York, United States, Oct. 16, 2023 (GLOBE NEWSWIRE) -- Financing methods, techniques, and instruments that aren't part of the traditional financial system, such as unregulated banks and capital markets, are referred to as alternative finance. Reward-based crowdfunding, equity-based crowdfunding, revenue-based financing, online lenders, peer-to-peer consumer and business lending and third-party payment platforms are examples of alternative financing operations through online marketplaces. According to Straits Research, “The global alternative financing market size is anticipated to reach USD 10.61 billion by 2030 at a CAGR of 6.17%,”
Rising Trends
- Fundraising has become much easier thanks to alternative forms of finance.
Raising money has become much simpler and faster thanks to alternative finance. Alternative finance providers are frequently well suited to the needs of smaller companies and start-ups looking to grow. It is not only because they can offer less stringent criteria than conventional lenders like banks but also because they can be more adaptable and responsive while offering first-rate customer service.
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The main force behind the market is the ease of access to funds compared to conventional funding. Additionally, the market is driven by rising consumer cost savings, the convenience of financing services, and rising consumer acceptance of alternative finance instruments. The COVID-19 epidemic had a favourable effect on the industry. The COVID-19 pandemic's impact on small enterprises has been felt strongly globally. Businesspeople and investors turned to alternative financing to seek funds and make investments to escape this crisis.
Growth opportunities
- The Indian market has the potential to grow in the coming years
India possesses a significant potential for the expansion of alternative financing. It has been somewhat realized in the preceding years that non-bank financing has a significant potential; nevertheless, due to the consistently high demand, this potential has not yet been fully tapped. The large pool of internet users in India (624 million people or 29.9 per cent of all users analysed across all regions) and the high smartphone penetration in India (600.9 million people, or 42 per cent of the total population of India in 2021) will ensure the development of the market, both now and in the future.
Regional analysis
According to region, the market is divided into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa.
Asia-Pacific had a significant market revenue share of more than 80% in 2021. Directly connecting investors with consumers and small business borrowers, gathering venture capital for start-ups, and creative funding firms are some examples of alternative financing activities in the Asia Pacific region. The region's alternative finance market is expanding due to innovation, with businesses changing their business models and the products they offer. Alternative financing is a form of funding that has grown and changed incredibly quickly in China. As a result, the Asia-Pacific region has an increased demand for alternative financing.
North America is expected to have the highest CAGR during the forecast period. In North America, alternative financing has entered the mainstream, drawing more consumers, start-ups, well-known small enterprises, and institutional investors. When compared to other nations, the United States has the most start-ups. The United States and Canada have 70,339 and 3,194 start-ups, respectively, according to Start-up Ranking. As a result, the North American market for alternative finance will be substantial. As a result, it is expected that the CAGR in this region will be the highest during the forecast period.
Key Highlights
- Asia-Pacific dominates the alternative financing market.
- The global alternative financing market is divided into three parts based on type, end-user, and region. Further, the market is bifurcated into Crowd investing and Crowdfunding based on type. In 2021, the market was dominated by the crowd investing segment.
- Based on end-user, the market is divided into individuals and Enterprises.
- According to region, the market is divided into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa.
Competitive analysis
Key players contributing majorly to the global alternative financing market are FundedByMe AB, Thunder Fund; Kickstarter, PBC; Wefunder Inc.; GoFundMe, Inc.; Patreon, Inc.; CAMPFIRE, Inc.; Crowdcube Capital Ltd; Indiegogo, Inc.; and StartEngine Crowdfunding, Inc.
Recent developments in some of the key players:
- In December 2022, Kickstarter launched a new project to bridge the gap between two worlds. Blockchain technology will be used to develop a crowdfunding system similar to Kickstarter's, but with a twist.
- In April 2022, Wefunder announced the launch of communityround.com, a website that will promote venture-backed firms that have successfully raised Community Rounds and those that are preparing to do so.
- In May 2022, FINRA issued a fine of $1.4 Million to Wefunder and a fine of $350,000 to StartEngine Capital for compliance violations.
Market Segmentation
By Type
- Crowdinvesting
- Crowdfunding
By End-User
- Individual
- Enterprises
By Region
- North America
- Europe
- Asia-Pacific
- Latin America
- The Middle East & Africa
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