CODE Investing’s altFin predictions for 2017
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What can we expect from the altFin sector in 2017?
Not only did we launch our new branding as CODE Investing, we also successfully raised over £50,000,000 of funds via both debt and equity financing in 2016. This has been our most successful year so far and we are looking to expand further on that success over the next 12 months.
But what about the rest of the altFin sector? Here’s our thoughts on what lies ahead in 2017.
What changes can investors expect from the altFin sector?
One thing we can be sure of is more regulations. The FCA’s report on crowdfunding in December is a clear indication of that. We certainly agree there are areas that need tightening up across the industry, as long as those regulations don’t in any way impinge on legitimate small business growth.
We’re also expecting to see more joint ventures between altFin companies and banks in 2017 as banks realise they can gain a stronger foothold in the market by joining forces.
How will crowdfunding and P2P financing fare in 2017?
Crowdfunding will continue to prosper. This growth will come from later stage, high growth businesses as more and more companies realise the efficacy of raising capital via online platforms.
P2P will also continue to develop but we foresee more loan defaults if the UK economy takes a turn for the worse.
We are at an all time low in the rate cycle: the only way is up from here. The question is how long we have to go at these unprecedented levels. Already financial markets are factoring increase in rates in the coming months.
Banks will continue to be constrained by capital rules so there will still be a need for alternative finance. But investors will have better fixed income investment returns with higher rates, so P2P lending will have to be competitive.
Due diligence processes will become more automated, meaning the application process for businesses could become much more efficient and streamlined.
What are some of the biggest challenges facing small businesses in 2017?
Uncertainty regarding Brexit and access to European markets will be particularly acute as negotiations linger and will no doubt take longer than initially thought. This will have a knock-on effect on investment and capital spending.
The UK economy might take a hit, particularly on imported inflation caused by a decrease in value of the pound.
Finally, rates are the big question mark for 2017: US and EU inflation are accelerating and no one can foresee how many hikes the central banks in both zones will implement. Long term rates are already on the up from rock bottom level and it’s only a matter of time before they start rising in the UK, raising the cost of finance for SMES.
What are CODE’s plans for 2017?
Our aim on 2017 is to further streamline our processes, making it faster and easier for high growth, qualified businesses to get funding without compromising our stringent due diligence
We will continue to source quality SME borrowers who need access to finance.
Likewise, we will continue to offer diversified, alternative, higher yielding investment opportunities to our investors.
Code Investing aims to be the number one SME Lending Marketplace in the UK
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A growing number of institutional lender are redirecting their funds, to provide finance to UK SMEs.
CODE Investing has entered into a strategic collaboration with City of London Group to originate SME loans
CODE Investing has entered into a strategic partnership with BNP Paribas Asset Management to originate SME loans.