Alternative Finance: Hallmarks of a Next Generation Platform

Ryan Weeks from AltFi News has kindly provided the guest blog below, which outlines the hallmarks of a next generation alternative finance platform.

I recently profiled Spain’s leading peer-to-business lender – LoanBook. The nascent platform – which launched in October 2013 – has from the beginning catered specifically (though not exclusively) to the needs of institutional investors. LoanBook sports a diverse set of products (loans, pagarés and lines of credit), a personal touch approach with prospective borrowers, and a secondary market for selling shares in loan contracts. I pitched the structure of LoanBook as broadly representative of what the next wave of alternative finance platforms are going to look like. The key features? An institutional focus, a holistic approach, an element of face-to-face interaction, and enhanced liquidity.

There are a number of early-stage platforms out there that tick at least a few of these boxes. CrowdShed – the very recently launched crowdfunding platform – has tried to satisfy a more complete range of fundraiser needs than its competitors. Though initially focused on rewards based crowdfunding, the platform will launch equity and debt based products early in 2015. The “Shed” provides platform users with a physical location in which to interact, host events, attend talks and participate in workshops. CrowdShed are looking to capitalize on demand within the alternative finance world for a greater level of personal support – both in the build up to and beyond a fundraise.

CrowdShed is not alone in featuring a physical infrastructure of sorts. Folk2Folk – the fast-growing peer-to-business lender from the South West – is the only known platform to boast a bank-like branch network. Both borrowers and investors can visit Folk2Folk premises in order to talk through any questions or concerns that they may have with the platform.

When I first spoke to Johnathan Ransom, Director at Loanbook, I told him that I’d never come across a platform that provided both a typical loan product and a factoring service. A few hours later that day, I met up-and-coming Estonian peer-to-business lender Investly – which is also offering a blend of invoice finance and lending. On the Funding Circle platform, where investors pick their own loans, those lenders are encouraged to strive for diversity by partaking in hundreds of different deals on the platform. But many investors within the alternative finance space also choose to diversify by allocating funds across a number of different platforms – thus getting exposure to numerous product types. Platforms like Investly, Loanbook and soon CrowdShed will allow investors to gain access to multiple products within one, all-encompassing platform.

If you would like to read more on Ryan’s views of next generation alternative finance platforms the full article can be found here. AltFi will be joining us at the Peer to Peer Lending & Investment Briefing on 15th October to discuss p2p lending and the role of institutional money in the sector. Our award winning speakers of RateSetter, Funding Circle and LendInvest will also be presenting their expert knowledge on this industry. Download the brochure here.

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