The alternative finance movement has the world within its clutches, and is becoming an increasingly mainstream option for finance-needy borrowers across the globe.
And as with any movement sporting the pace and breadth of alternative finance, a flourishing ecosystem of support is growing up in its wake. Perhaps the most intriguing members of that ecosystem are the aggregators. The alternative finance space boasts a baffling range of providers and projects – capable of perplexing both funder and fundraiser alike. The aim of the aggregator is to centralize the alternative finance opportunity.
An aggregator can be investor facing – pooling campaigns from various peer-to-peer or crowdfunding sites, or borrower facing – showcasing and simplifying the alternative funding routes on offer to businesses and individuals. A wide range of contenders are now challenging for the oft-repeated title of “one stop shop”.
So who are the aggregators? I’ve compiled a list (doubtless far from exhaustive) of the sites that I am aware of below:
CF4ALL – CrowdFunding4All is a project search engine that allows backers to find, follow and fund projects that match their interests. The site combines the largest database of projects (over 48,000 active campaigns – largely rewards-based) with CrowdCredits. These CrowdCredits are a “social currency” that serve as a leveling device among platforms. Users can assign CrowdCredits to a project that they particularly like, without committing financially to that project – thus driving it up the aggregator’s search rankings. CF4ALL is the industry's only crowd-powered search and analytics network with a proprietary approach for gathering cross-platform data on every critical aspect of crowdfunding activity. The aim is to provide an unprecedented 360-degree view of user behaviour and attitude. The US based CF4ALL intends to branch out into the UK and Australia – as well as the world of equity and debt based campaigns – very soon.
CrowdSifter – CrowdSifter pools and displays the very best projects from the world of crowdfunding on a weekly basis. In what I would best describe as a form of social media for the industry, backers can like or follow projects, leave comments, search by tags and, of course, support them financially.
UP Investments – UP Investments is trying to position itself as the “crowdfunding supermarket” – pooling opportunities from the equity crowdfunding and peer-to-peer lending sectors in one place. The unique feature of this aggregator is that it also offers a portfolio management tool – whereby investors can track and manage all of their investments across alternative finance platforms from one, convenient hub.
CrowdsUnite – CrowdsUnite is a borrower facing proposition – helping entrepreneurs to select the site that best matches their requirements. The site stores a wealth of information on a wide range of platforms. Users can filter the platforms down to those for which they qualify, and then compare them side-by-side – with the added benefit of having access to a host of user reviews from fellow entrepreneurs who have already used a given platform. As Founder Alex Feldman put it – a “Yelp for the crowdfunding industry”.
Outgrow.me – Outgrow.me stands out from the other aggregators in that it in fact collects and collates projects that have already been successfully crowdfunded. As you can imagine, as a marketplace for crowdfunded ideas, the site features some really creative products. This particular site intrigues me, as I consider it (and other similar sites) a vital puzzle piece in the constantly evolving crowdfunding ecosystem.
Alternative Business Funding – A collaboration between 7 (initially) of the UK’s leading alternative funding providers, this portal allows SME borrowers to whittle their way down to the most appropriate alternative finance provider for their funding needs. The portal is attempting to position itself as the landing spot to which banks can signpost the SMEs that they have found unsuitable for a loan. This will be a particularly advantageous position to occupy should the UK government pass legislation forcing banks to comply with the above mentioned referral system.
CrowdFundFusion – CrowdFundFusion seeks to aggregate opportunities for investors – but also provides a service for fundraisers. For investors, the site groups and organizes all of its listed projects into distinct categories, sub-categories and types, in order to enhance the process of project perusal. You might, for instance, be looking to back a project in the field of medicine – and could track down the options on offer from across a wide range of platforms. Project creators can list their campaigns on the site, as well as being able to access resources to help with the planning and running of those campaigns.
Business Agent - Businessagent.com is adopting a holistic approach in its attempt to become the leading crowdfunding aggregator. The site has combined crowdfunding opportunities with Businesses for Sale to allow users to invest in opportunities, compare their portfolio and sell on their investments. Businessagent.com is also looking to shrink the number of unfunded projects by helping to increase revenue generation and visitor flow for crowdfunding entrepreneurs.
The Crowdfunding Centre – The Crowdfunding Centre aggregates and displays crowdfunding opportunities from across the globe. The site showcases these projects in a number of interesting ways – i.e. allowing investors to see “trending” projects, a section dedicated to near-completed campaigns, etc. But what really sets The Crowdfunding Centre apart is a strong emphasis on data. The platform is ideally placed to harvest stats from all over the world, and it uses that data to produce some fascinating reports on the platforms, projects and entrepreneurs. The site has been described by Founder Barry James as “an online living-map, a kind of Google Earth for crowfunding”.
So, you get the picture – there are already a fair few serious operators in the aggregating space. But what benefits are these site bringing to industry? Are they friend or foe to the alternative finance space?
Well, we’ve touched on the majority of the benefits above – but to summarize: the chief benefit of aggregators lies in the ease and simplicity that they bring to the crowdfunding and P2P lending sectors. While alternative finance platforms are typically famed for the user friendliness of their websites, the fact that many investors and fundraisers are unfamiliar with the space can lead to feelings of doubt and confusion. Aggregators can help here. By centralizing the mind-boggling array of options on offer – newcomers can more assuredly make sense of those options.
Aggregators like CF4ALL democratize the fundraising process for entrepreneurs – their CrowdCredits ensuring that the most worthy projects land high up on investor searches, irrespective of the platform upon which they are featured. CrowdsUnite’s concentration of user reviews will doubtless prove an invaluable resource for many entrepreneurs. Outgrow.me bridges the gap between crowdfunding an e-commerce. The Crowd Funding Centre provides a much-needed statistical insight into this ever-expanding sector. The point is – there are many, many benefits engendered by these hives of alternative finance activity. But there is also some potential downside.
The major concern – and this applies to most of the models listed above – is that they are attempting to re-intermediate a famously disintermediated industry. Whether it’s investor opportunities or fundraising options that a site is aggregating – it’s a safe bet that they’ll be taking a cut of the ultimate transaction. Some will take a slice out of the fundraising fee, others might make their money from a portion of the amount invested. Now it might be that the fee is totally worth the funders, entrepreneurs and businesses that get driven to the platforms by the aggregators in exchange.
The danger, I feel, lies in a theoretical, far-off scenario in which the actual finance providers have become overly reliant on the aggregators to source their customers. In that situation – what’s to stop the aggregators asking for a larger cut of the action? Realistically, however, some platforms simply aren’t ever going to become reliant on aggregators. In my opinion over-reliance is more of a genuine risk in the crowdfunding sector (particularly rewards-based) than in the world of peer-to-peer lending.
As my title suggests – the way forward is for the platforms to strike an appropriate balancing act with the aggregating bodies. They could, and probably will, serve as tremendously useful tools for enhancing deal flow, simplifying and centralizing opportunities, and leveling the playing field. But aggregation will have its detractors and it will certainly have its costs. The various aggregating bodies will have to prove to the many platforms that they exist to support the alternative finance movement, and not to exploit it.
AltFi Amsterdam Summit 2018
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.