Are Marketplace Lending and Crowdfunding New Asset Classes?

New financial asset classes (Crowdfunding – Donation, Equity, Reward; P2P) are emerging fueled by investor demand for premium deal flow (Equity Crowdfunding –HealthiosXchange), lower fees (borrowers refinancing high cost consumer debt via Marketplace Lending – Prosper), philanthropic motivations (“Impact the World” via micro-finance – Kiva), desires to prepay for innovative products (Reward-Based Crowdfunding platforms – Kickstarter), and legislation (the JOBS Act). Are Marketplace Lending/Crowdfunding new asset classes? The stats say Yes! (Source: Massolution)

Growth rates accelerating

  • Market grew 81% from 2011-2012 exceeding 64% growth from 2010-2011
  • Funds raised via Equity Crowdfunding projected to increase from 4% (in 2013; 200MM) to 8% (in 2014; $800MM) of total capital raised in the sector
  • Limited Partners going direct – Sensitivity to high fees as demonstration by Calpers recent decision to eliminate hedge funds from their portfolios and retail properties

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