It is a little early to say quite how president-elect Trump will handle his term in office will impact alternative finance, however one area that the sector will keep an eye on is that of regulation, something Trump spoke of ‘cutting’ during his campaign trail.
Regulation is a positive step, however it comes at a financial cost and regulators, just like investors, need the right information to be able to make decisions that look not just at today, but also the future. With new markets, like crowdfunding, that can be hard to do, as the amount of information available is considerably less than that of more established markets.
Since the Brexit decision, there has been a downturn in equity crowdfunding. This is not because the appetite for investment from businesses and entrepreneurs has necesarily weakened; rather, equity crowdfunding sites are concerned about the direction that regulatory oversight could take and so have become much more cautious.
Again, this is not necessarily bad news. We would expect to see changes to the way that these sites operate as the market matures and it is right that investors and businesses are very clear about what could go wrong as well as what can go right. However, for those seeking investment through these sites this new caution may feel bewildering.
It will be interesting to see if president-elect Trump provides an upswing for Alternative finance in the USA. In the UK, despite the downturn in growth in equity crowdfunding the Alternative finance market continues to grow, particularly in the debt sector. With low interest rates and ISA tax wrappers open for peer-to-peer lenders perhaps this is unsurprising, as regardless of the political landscape those with capital to invest are seeking attractive opportunities for their money to grow.
Sacha Bright is CEO of Businessagent.com.