A recent report showed that a quarter of high net worth investors are now allocating at least one fifth of their wealth into alternative assets such as peer-to-peer lending as it helps them diversify their portfolios in order to enhance returns and increase resilience. These findings are in line to what we’ve seen at Blend Network: as we are on track to exceed our first-year’s lending target, our fast growth was supported by lending from high net worth investors and family offices who still constitute over half of our lender-base.
But, it’s not only investor royalty who have taken a liking to alternative investments in recent years. Private investors are also increasingly allocating part of their investment portfolio towards alternative assets. At Blend Network, we have seen a rapid growth in private investors who lend less than £5,000 on each loan. In this context, peer-to-peer is a great tool that has helped democratise investments by giving private investors access to the exact same deals as larger and more sophisticated investors.
Traditionally, smaller private investors have had difficulty accessing the more exclusive deals only available to institutional investors who were investing large sums of money. For example, it is not uncommon for a hedge fund to require at least £100,000 or even as much as £1 million to participate. Now, in an era of financial liberalisation, peer-to-peer lending is helping democratise investing by giving smaller private lenders the opportunity to co-invest in the same deals with very sophisticated institutional investors. And that’s a good thing. It’s good because a) at last, just about everyone who has any discretionary capital can invest in deals that were previously funded by banks or large investors, b) 99% – instead of just 1% – of the investing population can put some capital in those deals, and c) small and medium entrepreneurs get access to finance to fund their projects.
At Blend Network we are all about giving lenders direct access to great deals; deals that they would have otherwise not been able to get!