Co-operation over competition

By Faith Sylvia, business development manager

Alternative finance has grown at an unprecedented rate in the United Kingdom over the course of the last few years. As is the case with any fast-growing industry, the new sector has attracted many, often small, companies hoping to take advantage of the newly disrupted marketplace.

Despite this extraordinary success story, however, there are now some question marks over the sustainability of the sector’s staggering growth. The last comprehensive industry report in the UK was undertaken in 2015 (Pushing Boundaries: The 2015 UK Alternative Finance Industry Report) and even at that time there was evidence of a decline in new entrants. Indeed, it now seems clear that the industry is starting to settle, with the successful models surviving and some companies already shutting their doors.

Should this be correct, it seems likely that the industry will continue to coalesce around the biggest players as they attract more funds and increase their product offerings. If the smaller alternative finance providers are not to be ignored they will need to merge, or at least work together, acting more co-operatively rather than competitively, in an effort to promote the industry as a whole.

The Route – Finance has been active in the alternative finance industry from its inception in 2008, and has been a prominent advocate of co-operation within the sector since the relaunch of its Private Debt Platform in 2013.

The Platform operates in a fairly niche position and focuses on ‘special situations’ lending, where decisions need to be made swiftly with complete certainty of outcome. Nevertheless, The Route – Finance frequently collaborates with other lenders to secure optimum funding solutions for borrowers whose requirements do not fit The Route’s model.

This mutual co-operation ensures that opportunities are directed to the most appropriate funder while both meeting the needs of UK businesses and filling the funding gap that the big banks have ignored for too long.

However, alternative finance is still, in large part, a turbulent and disjointed sector, lacking in structure and definition. This is made particularly obvious by the many sub-sectors of alternative finance that can now be identified: sophisticated investor-to-business lending, equity-based crowdfunding, invoice trading, P2P business and consumer lending and the more recent property crowdfunding, to name but a few. Several aggregator websites have emerged in order to help borrowers and finance brokers alike in their quest to match borrowers with an appropriate funder.

Having worked collaboratively in the sphere for years, The Route – Finance has produced a guide to the alternative finance industry, which serves as a general overview for intermediaries and borrowers alike. While it isn’t the definitive directory for the industry, the guide clearly lays out the key players in an easy-to-read manner with all of the relevant figures for each company, including type of finance, typical loan amount and number of businesses funded. The Route’s fully-updated, 2017 version of the Alternative Finance Guide is available to all intermediaries and finance providers who wish to explore the wide range of alternative funding options available to borrowers.

If you would like to receive a free copy, please email info@theroute-finance.com.