£368 million has been raised by 751 businesses since 2011, according to the last report from AltFi, but 2016 will see the crowdfunding sector raise less than it did in the prior year for the first time since crowdfunding emerged in 2011.
The report also claims an average industry rate of return for investors of 8.55 percent. When taking into account the tax reliefs that are available for crowdfunding investors this figure jumps up to 19.14 percent, showing that equity crowdfunding investments have the potential to outperform the market.
However, the study, which looks at six of Britain’s biggest platforms, predicts that companies will crowdfund close to £130 million this year but that is below the total of more than £155 million raised in 2015.
According to experts, it is inevitable that Brexit will have played a part in causing the slowdown seen in Q3 of this year, impacting both the issuer and investor side.
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, analysts say.
Following the report from AltFi, Crowdcube co-founder Luke Lang calls for the industry to back recommendations for a common set of rules and principles for measuring the performance of crowdfunded businesses.
He claimed:‘As the crowdfunding industry matures, we need a unified approach to reporting on the performance of crowdfunded businesses,” news report.
He added, ‘The report is certainly a positive step for the industry and one we wholeheartedly endorse. Increased transparency of the due diligence process and ongoing performance of investments is critical for our maturing industry and investor confidence.’
Rupert Taylor, founder of AltFi Data, said, ‘Disclosure that encourages scrutiny of asset performance is in the interests of both platforms and investors. It allows investors to appraise historic returns. In turn it allows platforms to create trust amongst investors and confidence amongst issuers. This combination should encourage a more widespread adoption of the asset class.’