The peer-to-peer and equity crowd-funding markets totaled $6.4 billion at year-end 2013.
So concludes the International Organization of Securities Commissions (IOSCO) in a February 2014 working paper “Crowed-funding: An Infant Industry Growing Fast.” The report examines financial return crowd-funding and insights on the implications for users.
Crowd-funding refers to the use of small amounts of money, obtained from a large number of individuals or organizations, to fund a project, a business or personal loan, plus other needs through a Web-based platform. The research analyzes two areas of crowd-funding: peer-to-peer lending and equity crowd-funding, types of market-based finance collectively described as financial return crowd-funding of FR crowd-funding.
In the aggregate, the research shows, the U.S., U.K. and China constitute 96 percent of FR crowd-funding, the U.S. accounting for 51 percent of the market. China and the U.K. make up 28 percent and 17 percent, respectively.
Grouped together, the U.K., and the U.S. account for 68 percent or $4.3 billion of the FR crowd-funding market. Southeast Asia holds 28 percent market-share; South Korea and China nab most (95 percent) of the Asian market, the total for China pegged at $1.8 billion.
Citing research by Pierrakis and Collin concluded in 2013, the IOSCO report identifies individuals between the ages of 40 and 60 and experienced investors in securities as the predominant lenders engaged in peer-to-peer lending and equity crowd-funding.
“[A]lmost 40 percent have more than 10 years of experience working with [small and medium-size enterprises], with 83 percent being male,” the report states, adding that experienced retail investors are “investing small amounts of money in a great number of projects.”
The report observes the peer-to-peer market is growing fast. Though still a tiny percentage of the global lending (0.01 percent), peer-to-peer lending at year-end 2013 stood at $2.8 billion, up 145 percent from 2012.
The average year-over-year growth rate for the U.S. and the U.K. are 79.1 percent and 99.5 percent, respectively.