The crowdfunding market has doubled in 2023 and shows no plans to slow down

In 2023, the volume of the crowdlending (crowdfunding) market doubled, exceeding 24 billion rubles. The segment may maintain high growth rates in the coming year. However, this growth can mainly be achieved through the marketing efforts of companies. Market factors indicate that the market is holding back: the high key rate has almost equalized the profitability for investors in the crowdlending segment and less risky instruments.

At the end of 2023, crowdfunding platforms issued financing totaling RUB 24.1 billion. This is twice as much as at the end of 2022, according to data from the Money Friends site. In total, almost 11 thousand loans were issued during the year, 18% more than the previous year.

Industry participants are optimistic about 2024: despite high rates that are holding back market growth, it could double by the end of the year, the surveyed companies expect. “High rates are holding back market growth. We have learned to only partly shift their growth onto the borrower, and compensate part of it from our own margin. But, naturally, the reduction in rates, which is expected in a few months, will be an additional factor in market growth,” says Potok managing partner Yuri Popov.

According to JetLend CEO Roman Khoroshev, the market could reach 50 billion rubles. based on the results of the current year. Potok is also expecting a doubling of the market. The Association of Investment Platform Operators (AOIP) estimates growth at least 1.5 times. However, the market capacity is still very high, so the growth rate will primarily depend on the marketing activity of the platforms themselves, and not on market conditions, indicate Ivolga Capital.

A restraining factor for the market may be the fact that, under conditions of strict monetary policy, rates on platforms are moving closer to bank rates.

“The price of financing on the platforms is still lower than in the IFC, and rates are not rising as significantly. But gradually they are getting closer to bank rates,” admits AOIP Executive Director Kirill Kosminsky. “High rates cool the demand for money, and crowdlending is no exception: business loan rates have shifted to the range of 23–35% per annum, which significantly cools the appetite for borrowing,” notes managing partner of Money Friends, Yuri Kolesnikov. “The limit utilization rate is usually around 15%. After August last year it has not risen above 11%. Entrepreneurs are waiting and are not always ready to take out loans at higher rates,” Mr. Khoroshev cites the data.

In addition, opportunities have opened up for investors to make less risky investments in instruments with fairly high interest rates, notes Mr. Kolesnikov. Roman Khoroshev also notes that investors will withdraw funds from the platform and direct them to deposits or bonds.

However, the company is not yet talking about a massive outflow of clients.

“Although the current monetary policy practically compares bank lending rates and rates on loans from private investors in crowdlending, more and more borrowers are coming to the platforms for private investments due to more flexible and convenient conditions for obtaining financing,” says Dmitry Isakov, CEO of the Lender Invest platform (see “Kommersant” dated December 4, 2023). Among them are bond issuers and clients of microfinance organizations, he notes.

It cannot be said that crowdlending companies are losing more than others from rising rates, notes Ivolga Capital analyst Mark Savichenko. “Rates are rising, but certainly not in proportion to the value of money. The key rate has more than doubled since the middle of the year; no market rates (including crowdlending) have doubled during this time,” he concludes.

Polina Trifonova