Over the last five years, digital financial services like crowdinvesting and crowdfunding became an appealing alternative for thousands of investors and start-ups, connecting borrowers directly to lenders through online platforms and offering different models of investing in their business growth. As a result, the entire sector continued growing in 2020, despite the COVID-19 and shows no signs of stopping in the years to come.
According to data gathered by Block Arabia, the global alternative financing industry is expected to reach $8.9bn transaction value by 2023, a 20% increase in two years.
Crowdinvesting as the Largest Segment to hit $7.8bn Value in Two Years
The alternative financing industry includes digital financial services for business customers. Crowdinvesting, as the market’s largest segment, focuses mainly on start-ups exchanging investment for company shares.
On the other hand, crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture.
Between 2017 and 2019, the transaction value of the global alternative financing market jumped by almost 50%, rising from $3.9bn to $5.8bn, revealed the Statista data. In 2020, this figure increased to $6.3bn, despite the COVID-19.
Statistics show the unified market is set to reach almost $7.5bn value in 2021 and then grow by another $1.4bn in the next two years. By 2025, the transaction value of the global alternative financing market is set to reach over $9.8bn.
Crowdinvesting, as the market’s largest segment, is expected to hit a $7.8bn transaction value by 2023, a 23% increase in two years. By 2025, this figure is set to grow to $8.6bn. Also, last year, the average funding per campaign in the crowdinvesting segment amounted to around $103,500. This figure is set to reach $112,700 in 2021 and then jump to almost $122,000 by 2023.
Statistics show the crowdfunding segment is forecast to reach $1.1bn value in the next two years, compared to around $1bn in 2021, with the average funding per campaign growing from $5,800 to $6,400 in this period.
The United States to Account for 20% of Global Transaction Value, Israeli Market to Witness the Biggest Growth
With a $1.5bn transaction value in 2021, 12.3% more than a year ago, the United States ranked as the world’s largest alternative financing market. The Statista data showed this figure is forecast to grow by 13% to $1.7bn in 2023.
As the second-largest alternative financing market globally, China is expected to reach $1.6bn transaction value in the next two years, compared to $.1.35bn in 2021.
However, statistics show that Israel, as the third-largest market, is set to witness even more significant growth, with transaction value growing by 30% in the next two years and reaching $1.33bn.
The United Kingdom and the Netherlands round the top five list, with $1.1bn and $0.7bn in transaction value by 2023, respectively.