Liberum AltFi Volume Index - Cumulative UK Lending Volume
Looking at just the lending platforms, we have obtained investor numbers and history for 15 of the 22 platforms in the Liberum AltFi Volume Index (see below for a full list of platforms). This accounts for over 95% market share of the Index, enabling us to build up an accurate picture of the entire industry. We are only counting active investors, ie investors who have actually deployed money on a particular platform, not just registered with them.
The aggregated investor numbers can be seen in the chart above -149,000 as at the end of Q1 2015. However this is just half the story – this number represents the total number of registered users on all platforms. It is highly likely that some investors are active on several platforms. What we would like to determine is the number of unique investors in the industry.
In Autumn last year a survey of over 3,000 RateSetter investors revealed that 30% of them invested in more than one platform. Of those 30% of respondents, the average number of platforms invested in was 2.6. This would give an average number of platforms per investor of 1.5. This would mean that the 149,000 number would equate to just under 100,000 unique investors.
Now, as with every survey, sampling errors are likely to exist and the survey was only carried out on RateSetter lenders. However, it does give us a good data point and it ties in with qualitative conversations that AltFi Data has had with other industry participants. AltFi Data therefore estimates that there are between 90,000 and 110,000 unique investors in UK debt based Alternative Finance.
It is also unclear as to how the average number of platforms that P2P investors use has changed overtime. With more choice of platforms do investors now diversify more across platforms than they did a year ago? Or with the increase in size and diversification of some of the larger platforms are investors reducing the number of platforms that they use? What impact is institutional money having on the equation? Unfortunately these questions are virtually impossible to answer and therefore further analysis, such as comparing investor growth rates and volume growth rates could have significant limitations,
The P2PFA platforms all now publish their outstanding loan principal on a quarterly basis. This allows us to calculate the average amount that an investor has lent through each platform. The chart above shows that the range is surprisingly large – from just under £6,000 to just under £125,000. This indicates that the type of investor that each platform serves differs significantly. With increasing institutional interest in the sector, average investment amounts are likely to increase across the board. However we know that Funding Circle has had active institutional investors (such as the British Business Bank, which buys 10% of most of FC’s loans to SMEs) for a few years. The platform has also, in the last 9 months, seen increasing amounts (up to 40% by volume) of whole loans snapped up by institutional buyers. It is therefore perhaps, slightly surprising that the platform still has the third smallest average investment per lender of the P2PFA members.
Perhaps the thing that struck us most when looking into investor numbers is how small the number of unique investors in UK P2P is. The latest figures from HMRC show that in 2013 there were 22.7 million holders of ISAs in the UK, of which 6.8 million hold stocks and shares ISAs. These numbers dwarf the P2P investor numbers and highlight just how big the retail investor opportunity is for the sector. That’s not even considering the hoards of institutional investors that are beginning to circle the space.
Thank you to the platforms that provided information for this article: Zopa,RateSetter,Lending Works,Funding Circle,ThinCats,Assetz Capital,Rebuildingsociety,FundingKnight, Abundance Generation, LendInvest, Wellesley & Co., Crowdcube (MiniBonds), Landbay, Marketinvoice, Platform Black