The Alternative Finance Market in Spain

Marketplace Lending

• Comunitae is the largest Spanish P2B lender and has financed €21.2 million to date, with year on year growth of 128.4%, according to the Liberum AltFi Europe Volume Index (LAVICE). Investment is open to anyone over the age of 18 who has a bank account inside the EU. Investments must be at least €50. Investments can be made two ways: either investors select which loans they want to fund or they allow the system to automatically select loans that match their criteria.
• Loan Book Capital is a P2B lender and has authorised €4.5 million loans to date, with year on year growth at 133.9% (LAVICE). Investment is open to accredited and non-accredited investors (subject to regulation). Investors choose which loans they want to invest in.

Equity Crowdfunding:

• Crowdcube was launched in June 2014 and funnelled €1.24M in the first half of 2015. Investors can choose the companies they want to invest in and there is no minimum investment. In February, we took a look at how Crowdcube Spain was getting on.

The Spanish market is, in terms of rank, one of the largest European Alternative finance markets: ranking 8th (4th largest GDP). However it is very much in its infancy. The sector is expanding rapidly, with marketplace lending year to date growth at around 100%. Considering all marketplace lending platforms with a cumulative volume of over €1.1M, AltFi data calculates the Spanish sector’s cumulative lending volume to be €25.66M – including €9.82M in 2015 year alone. A report by Cambridge University and EY valued the whole AltFi market at €62M for 2014.

A new law was recently introduced in Spain, called “Ley de Fomento a la Financiacion Empresarial”. In Spain, creditors are divided into accredited and non-accredited investors. Private accredited investors must have either an income greater than €50,000 per year or assets over €100,000. For companies, they must have assets over €1 million, revenue over €2 million or equity over €300,000. If an investor meets none of these criteria – and is labelled a non-accredited investor – investments are limited to a maximum of €3,000 per company or €10,000 a year.

For companies looking for finance, a maximum of €5 million can be raised as long as exclusively accredited investors are involved and €2 million if non-accredited investors are included. Furthermore, the project is not allowed to raise more than 125% of its initial target.

The new legislation extends to platform regulation. Crowdfunding and marketplace lending platforms are regulated by the CNMV and must have capital of at least €60,000 – or €120,000 for raises over €2 million - or have social responsibility insurance with a minimum coverage of €300,000 for a complaint about damages and €400,000 per year for all complaints.

Only brought in on April 29^th 2015, it is hoped that the new rules will reduce market concentration – with 75% of lending estimated to come from banks.

The EY report continues with a breakdown of the alternative finance industry - correct as of publication Feb. 2015 - with each sector given as a proportion of the total 2014 market value (€62M):

• Reward-based crowdfunding            57%
• P2P Business Lending                        22%
• Equity-based Crowdfunding               17%
• Donation-based Crowdfunding           1.3%
• Invoice Trading                                    1%
• Mini-bond Offering                              1%