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Beyond investment trusts: Where's the next wave of capital going to come from?

Prodigy Finance - April 23, 2018

Prodigy Finance Alternative Investments

It’s difficult to believe that alternative finance (AltFi) is still in its infancy. Ten years ago, investment platforms such as Funding Circle, Prodigy Finance and Lending Club simply didn’t exist.

Yet, while it takes time for an industry to establish, the world of alternative finance has been steadily progressing.

At the recent AltFi London Summit 2018, Oliver Aikens, Head of Capital Markets at Prodigy Finance, shared his views on alternative finance platforms and growing funding sources in the panel discussion: Beyond investment trusts: Where's the next wave of capital going to come from?.

In addition to the panel moderator, Rory McHugh, Chief Capital Officer at Lendable, panel participants included:

  • James Newsome, Managing Partner, Arbour Partners
  • Katharina Lüth, Head of Europe, Raisin
  • Rens Ramaekers, Portfolio Manager ABS, AEGON Asset Management

The role of banks in alternative finance

Although the initial investment funds for Prodigy Finance loans came from alumni and angel investors, the product now attracts both retail and institutional investors drawn to social impact, for example launching the Higher Education Note in partnership with Credit Suisse’s Impact Investing and Microfinance team.

Alternative finance platforms provide banks with an opportunity to reach new customers (including some they’ve not previously been able to reach and those that don’t fit into their direct parameters), while platforms receive the required capital.

As the natural aggregators and source of pooled funds, banks will play a large role in the development of the alternative finance sector - but only if the relationship between banks and platforms is more than just transactional dealings.

That’s not, of course, to say that the banking sector is the only place platforms will experience growth over the coming years. As the space becomes more understood, it’s expected that more retail investors will jump on board - as they have with Prodigy Finance. 

The challenge of attracting retail investors to the alternative finance space

Attracting retail investors can be challenging for alternative finance platforms as many investors are exceptionally risk averse.

In time, it it likely that a “fund of platforms” will develop, as was the case with hedge funds and private equity, it just needs an established player to take up the challenge. This would bring in the subject of fees, which is traditionally what the alternative finance industry has avoided, focusing instead on savings.

Either way, for now, most platforms are concerned with educating investors on the benefits found in the growing alternative finance space.


Want to learn more about Prodigy Finance investment opportunities?

Our community of investors includes alumni, qualified private investors and institutional investors.

Why not watch the entire panel discussion now? View it below or watch in full-screen mode here

Prodigy Finance at the 2018 Alternative Finance Summit

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