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4 possible effects of Brexit on crowd finance

June 24, 2016 • By Emily Mackay



Over the last 24 hours, we have followed the fallout from the vote and closely monitored the reaction from the crowd finance industry. As a very international team it’s fair to say we’re more than a bit uneasy about the outcome. However, there could be great opportunity in this change for the industry, and I wanted to share these possibilities:

The UK’s referendum result has been announced and the decision to leave the EU has shocked many. Particularly in Cambridge, where Crowdsurfer is headquartered, which was very pro-‘Remain’.

Over the last 24 hours, we have followed the fallout from the vote and closely monitored the reaction from the crowd finance industry. As a very international team it’s fair to say we’re more than a bit uneasy about the outcome. However, there could be great opportunity in this change for the industry, and I wanted to share these possibilities:

1.  With the banks and currency markets in disarray, UK funding shortages will likely continue and could get worse as uncertainty and doubt fuel further caution. This increases the fundraiser push to crowd finance that has enabled the industry’s growth over the last 8 years.

2.  To contain the market fallout, the Bank of England could add billions into circulation and seek to keep interest rates low. This will result in savers/investors continuing to find few opportunities from traditional finance to make a return on their money. In turn increasing the investor push to crowd finance, where better returns are available.

3.  Doubt and uncertainty abound in just about everything financial and economic, so money will seek out new avenues. Crowd finance has evolved to offer a diverse range of different investment opportunities, whether it be by sector, funding type or geography. This diversity will prove attractive.

4.  An increased perception of risk will lead to a renewed focus on the due diligence applied to those seeking finance through the crowd. Whilst, this may slow the growth of the industry a little, it will quicken the transparency and subsequent understanding of the investment opportunities offered.

It is too early to see the actual impact of this result in the crowd finance industry data, as the market does not move at the same pace as others, such as currency exchanges. Over the coming weeks we will closely monitor industry volumes and see if the UK platforms are seeing any notable changes that might indicate what lies further ahead.

Watch this space.

Emily Mackay