Who will aggregate the aggregators?
- 21 Apr
As awareness of Alternative Finance grows and appeals to a wider audience, funding platforms are offering solutions for increasingly niche requirements. The sector is evolving fast and recent legislation mandating banks to refer unsuccessful loan applicants to non-banks, means an increasing number of business owners will be looking for direction on who to approach for their individual funding requirements.
On the other side of the coin, we have pensions reform and the promise of a lending ISA that many predict will bring a heightened level of interest from investors. This community too, will need help navigating its options.
Broadly speaking, Alternative Finance for businesses breaks down into four camps: Equity (e.g.Crowdcube, Syndicate Room, Angels' Den); Debt (FundingKnight, LendInvest, Crowd2Fund, Credit4); Receivables (Platform Black, MarketInvoice, URICA) and Asset Finance (Ablrate)
In response to the volume of platforms in each of these categories, there has been an emergence of aggregator or comparison sites which aim to simplify the selection process, much like the already familiar sites for comparing credit cards or insurance. Interestingly, some of the traditional comparison sites are also beginning to cover peer-to-peer.
Ironically, now there are so many sites aggregating the platforms, it’s hard to know which of those to start with!
There are different types of aggregator out there. Some (like Informed Funding and Alternative Business Funding) are using questionnaires and formulas to direct business users to a select number of providers. Others (like Business Agent) are aggregating equity and loan opportunities into one place for the benefit of investors.
We’ve compiled a shortlist of the aggregator sites we think have a clear offering and that would simplify the process for a business looking for finance or an investor looking to invest:
- 4thway–financial comparison featuring a ‘Risk Rating’and also a more in-depth ‘Insight Report’, aimed at explaining all the highlights and key features.
- Alternative Business Funding–a collaboration rather than a straight broking site, all listed funders agree to act in the same way and refer rejected SMEs back to the portal.
- Better Business Finance - managed by the British Bankers’Association (BBA) in collaboration with its business and finance partners.
- BusinessAgent–the only aggregator to host Crowdfunders and Crowdlenders on its website alongside 7,000 private businesses for sale.
- Business Finance Compared - backed by leading venture builder Blenheim Chalcot and an experienced board, Business Finance Compared are ultimately working towards the development of an automated lead to loan system.
- Finpoint - offers businesses looking for finance out to their lenders as identified by their criteria on a referral basis.
- Funding Options–one of the neutral platforms going for designation under the Small Business Bill.
- Informed Funding–a division of Knowledge Peers, Informed Funding offers representation via a microsite managed by each funding platform.
- InvestUP allows investors to buy shares and lend money from one site
- Nurture Money - independent crowdfunding comparison and content site.
- The Funding Centre–from AltFi, The Funding Centre features editorial focused around educating businesses on alternative funding.
It’s too soon to know who will be the winners and losers, but helping SMEs and investors navigate this rapidly growing marketplace and easily compare finance providers is an important part of bringing non-bank funding into the mainstream.