Alt-Fi for SMEs Truly Innovative, Research Shows

Archetypal business people discussing charts

Alternative finance, including equity crowdfunding and peer-to-peer lending, has changed the way small business financing works, according to new researrch from the University of Hertfordshire.

A peer-reviewed paper, "Critical innovations in the UK peer-to-peer (P2P) and equity alternative finance markets for small firm growth" appeared in the International Journal of Entrepreneurship and Innovation for August 2016, and the authors and publisher have kindly allowed a cpy to be made available free online.

"Alternative finance offers a series of important advantages over more traditional sources of early-stage capital for entrepreneurs seeking funding." say the authors.

"Service innovations around security, flexibility of terms, speed of access and transparency of pricing are as important as price considerations for many users, as are innovations made possible by the way. These online markets are structured and in particular in the way these innovative structures allow important types of risk to be dispersed and mitigated."

The paper examines the disruptive nature of financial innovations available to small firms by the growing range of online platforms that have emerged in the United Kingdom since the financial crisis. It is unveiled that finance provided to small firms via such mechanisms is not (emphasis added by Another Crowd) identical to more traditional sources, and its adoption cannot be said to be simply a question of direct substitution based, for example on a price comparison.

This research is published by Sage, and Another Crowd has linked to it for your convenience. If you have difficult viewing the journal article, please check that you have a PDF Reader configured.

Read the original in the International Journal of Entrepreneurship and Innovation on Sage Publishing's website.