CrowdLending (Business) - Estonia

The total transaction value in the Crowdlending (Business) market market in Estonia is expected to reach US$1.65m by 2024.
Looking at a global scale, China leads with a projected transaction value of US$16bn in 2024.
Estonia's CrowdLending market is seeing a surge in tech startups utilizing platforms to raise capital for innovative projects.

Definition:

Crowdlending platforms, otherwise know as lending-based Crowdfunding enable small and medium-sized enterprises to get loans from single or multiple, private and institutional investors via an online brokering platform. On credit platforms such as Funding Circle, OnDeck, Kabbage and Lending Club, businesses can obtain small loans up to a set maximum value. As a rule, financing requests are analyzed by the provider via an internal scoring system and are checked against additional minimum requirements such as turnover. Subsequently, these financing requests can be invested in by private and institutional investors at an appropriate interest rate determined by the credit rating of the company. This makes it possible for SMEs to borrow quickly and easily, as the basic requirements for obtaining finance are more flexible compared to traditional bank loans.

Alternative financing for SMEs and freelancers (bank-independent loans)
Small business loans issued by single or multiple private and institutional investors (non-banks)
Online loan request, scoring and approval

Traditional bank loans
Consumer loans and credit card transactions
Business-to-Business credit scoring and rating services
Online marketplaces for consumer loans (see Marketplace Lending)

The CrowdLending (Business) market in Estonia has been experiencing significant growth in recent years, driven by customer preferences for alternative financing options, favorable market conditions, and supportive government policies.

Customer preferences: Estonian businesses are increasingly turning to crowd lending platforms as a source of financing due to the ease and convenience of the process. Crowd lending offers a faster and more streamlined alternative to traditional bank loans, allowing businesses to access funds quickly and efficiently. Additionally, crowd lending platforms often offer competitive interest rates, making them an attractive option for businesses looking to secure funding at affordable rates.

Trends in the market: One of the key trends in the CrowdLending (Business) market in Estonia is the rise of peer-to-peer lending platforms. These platforms connect individual lenders with businesses in need of financing, cutting out the middleman and reducing costs for both parties. This trend has gained traction in Estonia due to the country's high internet penetration rate and tech-savvy population. Another trend in the market is the increasing diversification of crowd lending platforms. In addition to traditional business loans, platforms are now offering a range of financing options, including invoice financing, supply chain financing, and working capital loans. This diversification allows businesses to choose the financing option that best suits their needs, further driving the growth of the crowd lending market in Estonia.

Local special circumstances: Estonia's small business sector is a key driver of the CrowdLending (Business) market in the country. Small and medium-sized enterprises (SMEs) account for a significant portion of the Estonian economy, and many of these businesses struggle to access traditional bank financing. Crowd lending platforms provide an alternative source of funding for these businesses, allowing them to grow and thrive.

Underlying macroeconomic factors: The growth of the CrowdLending (Business) market in Estonia is also supported by favorable macroeconomic conditions. Estonia has a stable and growing economy, with low unemployment rates and a favorable business environment. This provides a solid foundation for businesses to thrive and seek financing options. Additionally, the Estonian government has implemented supportive policies to promote entrepreneurship and innovation, further fueling the growth of the crowd lending market. In conclusion, the CrowdLending (Business) market in Estonia is experiencing significant growth due to customer preferences for alternative financing options, the rise of peer-to-peer lending platforms, and the diversification of crowd lending offerings. The country's small business sector and favorable macroeconomic conditions also contribute to the growth of the market. With continued innovation and supportive government policies, the CrowdLending (Business) market in Estonia is expected to continue its upward trajectory in the coming years.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.