The UK equity crowdfunding market is looking set to end 2016 with full-year new equity issuance amounting to roughly £130 million, indicating a slowdown in momentum for the first time.
The figures come from an AltFi Data report, and refer to the six major players in the UK equity crowdfunding space – Crowdcube, Seedrs, Syndicate Room, Venture Founders, Code Investing (previously CrowdBank), and Angels Den.
“Our extrapolation suggests that 2016 looks set to be the first year in which the full year origination amount is dwarfed by the previous year,” AltFi Data’s report read.
The report indicates that only three platforms have contributed to the equity crowdfunding volume in Q3 2016. It is suggested that uncertain business environments – with Brexit being no insignificant factor – have forced UK businesses to reconsider their growth plans, and that is having an effect on the crowdfunding market.
The shift has gone in favour of the larger platforms in the third quarter, with their smaller counterparts not funding any new deals at all during the July-September period.
“If confidence returns in Q4, there may be pent up demand and a ready pipeline of deals on hold to drive a re-acceleration in Q4. But, without a rebound, the industry may need to re-adjust for a lower rate of growth, and that could mean a shake out of the smaller players,” the report said.
AltFi Data also highlighted an interesting trend emerging in the sector. Equity crowdfunding platforms are becoming increasingly specialised in facilitating funding in certain industries. Syndicate Room, for instance, is a leader in the healthcare industry, while Crowdcube is specialising in the consumer discretionary segment, and Seedrs the financial business sector. While none have emerged as exclusive, such differentiation is enabling the platforms to corner niche markets and protect future growth prospects.
Since 2011, equity crowdfunding has provided more than £368 million to growing companies in the UK.
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