T abajo Fin de G ado
Al e na i e ways o inancing SMEs
Fo mas al e na i as de inanciación de las PYMES
Au o
Alejand o Celada Suá ez
Di ec o
José Ma iano Mone a Abadía
Facul ad de Economía y Emp esa
Cu so 2019-2020
INDEX
Abs ac ………………………………………………………………………………… 1
1. In oduc ion ………………………………………………………………………... 2
1.1. In e es in he subjec …………………………………………………………… 2
1.2. Me hodology ……………………………………………………………………. 2
2. The impo ance o he SMEs om an economic pe spec i e ……………………. 4
3. The issue o bank inancing ………………………………………………………… 6
3.1. The yea s a e 2008 c isis ………………………………………………………. 6
3.2. Yea s be o e he imminen new c isis …………………………………………… 7
4. Al e na i e inance: meaning and ecosys em ……………………………………… 10
4.1. Al e na i e inance meaning ……………………………………………………... 10
4.2. Al e na i e inancing ecosys em a ound he wo ld ………………………………. 11
4.3. Al e na i e inancing ecosys em in Eu ope ………………………………………. 13
4.4. The di e ence be ween Eu ope and Spain ……………………………………….. 17
5. Al e na i e inancing o SMEs and s a -ups ……………………………………... 20
5.1. Risks associa ed wi h s a -ups …………………………………………………… 20
5.2. Con as be ween adi ional lending and al e na i e inancing oppo uni ies …… 22
5.3. S a -up accele a o s as a new unding ehicle …………………………………… 24
5.4. Success ac o s o SMEs and s a -ups om he poin o iew o he in es o s ….. 26
5.4.1. SMEs ………………………………………………………………………. 26
5.4.2. S a -ups …………………………………………………………………… 27
5.5. Why do s a -ups choose new unding o e adi ional bank loans? The success
ac o s o al e na i e inancing …………………………………………………… 32
5.6. Al e na i e inancing ends o s a -ups ………………………………………… 35
6. The cu en unding in Spain: an unp eceden ed si ua ion ……………………….. 36
7. A case s udy o success and p ac ical p oblems …………………………………….. 38
7.1. SMS Ibé ica, S.L. ………………………………………………………………….. 38
7.2. Wa by Pa ke L d. …………………………………………………………………. 39
7.3. Main di e ences ……….………………………………………………………….. 39
8. Conclusions ……………………………………………………………………………. 41
9. Bibliog aphy and webg aphy …………………………………………………………42
10. G aphs and ables …………………………………………………………………….. 48
11. Appendix ……………………………………………………………………………….. 49
1
Abs ac
This pape includes he ou comes o he wo k a ound issues ela ed o he al e na i e
me hods o inance SMEs. Gi en he di icul y o ob aining inance o SMEs, his wo k
ou lines di e en al e na i es o ge ing money om in es o s, no only om banks - adi ional
ways o inancing, as i was mainly in he pas , be o e FinTech e olu ion.
The pu pose o his disse a ion is o unde s and why SMEs, bu mainly s a -ups, a e
looking o al e na i e inancing op ions when s a ing and expanding hei businesses. The
inal objec i e is o unde s and which a e he main success ac o s o he inc ease in new ways
o inancing SMEs.
The e y beginning o his wo k deals wi h a de ini ion o al e na i e inancing and
SMEs. Then he e is an ou line o Al e na i e inancing ecosys em in Eu ope whe e he eade
can ind an in o ma ion abou he olume o al e na i e unding and Al e na i e inance ma ke
alloca ion in Eu ope. Since s a -ups a e a signi ican pa o SMEs, he pape holds mo e
in o ma ion alues abou S a -ups al e na i e inancing, i.e. s a -up accele a o s. F om he
poin o iew o he in es o s, success ac o s o hese companies a e he nex poin which can
help eade o unde s and measu able pa s o business and hei impo ance when looking o
addi ional inances in an al e na i e way. Then he wo k deals wi h success ac o s o
al e na i e inancing i sel . In o de o highligh he easons o he inc ease in popula i y o
new ways o inancing o s a -ups and SMEs, wo case s udies a e analysed.
To sum up all he in o ma ion b ie ly, his disse a ion helps people o unde s and no
only wha a e he success o he inc ease in new ways o inancing o SMEs, bu also he way
he al e na i e inancing wo ks and how does he e olu ion o his ma ke o new inancing
means looks like.
2
1. In oduc ion
1.1. In e es in he subjec
In he p esen di icul imes, SMEs ha e many p oblems due o he u u e economic
c isis, i i has no s a ed ye . Due o he p esen Co id-19 global pandemic, all o he Small
and Medium Size en e p ises wan some inancial liquidi y o be able o su i e in hei
espec i e ma ke s. Th ough hese complica ions, a conce n o he se e al means o inance is
eme ging.
Financing SMEs is, nowadays, one o he mos challenging subjec s, because o he
exis ing p oblems ega ding i . These p oblems a ec ed especially people wi h low wages o
young people who could no ind a job despi e ha ing a good esume. Bu now many ulne able
g oups ha e appea ed, like hose who a e ela ed o in he sec o o hospi ali y and ca e ing o
ou ism ( he mos a ec ed by ERTE
1
in ou coun y), as well as many companies in dange o
closu e. The cu en ac does no mean ha hese p oblems didn’ exis be o e/ p e iously, bu
he cu en si ua ion is jus a me e e lec ion o he policies ca ied ou in he las ew yea s,
igge ed by a d ead ul global pandemic.
In any case, i is necessa y o go deepe in o he subjec , no elying solely on ou
judgemen . We can no only assess he si ua ion o SMEs ega ding inancing, bu also o
design solu ions o hem, so hey can posi i ely a ec ou cu en si ua ion.
The e has o be o he ways o ge ing liquidi y, o he wise hese new companies will no
h i e well. And i a sec o o la ge co po a ions and banks a e no able o help SMEs, he e
mus be a di e si ica ion o po olio which can do so. And a his poin is whe e al e na i e
inancing become impo an , since i is a ype o inancing ha ope a es independen ly om
he bank, as well as wi h di e en consequences.
1.2. Me hodology
In o de o add ess he issue, i will be in oduced he impo ance o SMEs o Eu ope
and ou coun y, as well as he p oblem o he banking sec o in e ms o inancing. La e , an
analysis o he olume o al e na i e inancing will be made, making use o he da a p o ided
by Uni e si y o Camb idge. I should be no ed ha his Uni e si y has a depa men o
1
An ERTE is a Spanish legal concep ha implies he suspension o he wo k con ac o a limi ed pe iod o ime.
When he e m ends, he wo k con ac esumes on he same e ms, and he en e p ise canno i e a wo ke a ec ed
by his legal e m.
3
al e na i e inance, and e e y yea hey pe o m in es iga ions abou his inancing, which a e
o ally o public use.
A e in oducing he ansac ion olumes a ound he wo ld ocused on China. Eu ope
and Spain will be also analysed, bo h he olume an he mos impo an models. A b ie
compa ison will be made be ween hem. I will be exposed he impo ance o s a -ups, as well
as he p oblems hey ind o ge inancing; hese ypes o companies a e elemen a y since hey
could make he mos use o al e na i e ways o inancing.
E en hough i was no in ended, one poin will be dedica ed o new inancing ends,
in pa icula ICO c edi s and loans. I is impo an o analyse i because i could be he key poin
o he conclusion, gi en ha i in ol es a much less isky way o inancing.
Be o e he conclusions, i will be in oduced a case s udy: a Spanish SME based in
Za agoza , SMS Ibé ica S.L., and Wa by Pa ke , a company ounded in 2010 based in New
Yo k Ci y (USA). Due o hei di e en ways o inancing and di e en en i onmen s,
compa ing bo h companies seems in e es ing o his pape .
Finally, i will be exposed some conclusions abou he wo k.

4
2. The impo ance o he SMEs om an economic pe spec i e
Fo he common eade , a widesp ead hough lied on he impo ance o he g ea
en e p ises in he Eu opean Coun ies could exis , p obably because mos o he o dina y
business en i ies a e he g ea ones. Howe e , some imes we a e no awa e o he as numbe
o en e p ises in ou coun ies and, in e ms o SMEs, in 2016
2
he e we e 24.7 million.
The concep o SME has been de ined he Eu opean Commission in he
Recommenda ion 2003/361, whose main ac o s a e s a headcoun , and u no e o balance
shee o al
3
.The b eakdown o he concep is shown in he able below.
Table 1: de ini ion c i e ia o SMEs de ined by Eu opean Commission
Sou ce: Eu opean Commission
Small and Medium Size en e p ises ha e been decisi e in employmen c ea ion (in
Spain, 74%
4
o he o al employmen was c ea ed hanks o hem) and in he economic
subsis ence o he Eu opean Union Coun ies. In Spain, his kind o businesses ep esen almos
100%
5
o he o al o he en e p ises, which is e y simila o Eu opean a e which ascended o
99.8%
6
in 2016, his a e included Uni ed Kingdom. Thanks o hese da a, we can asse ha
Eu opean coun ies a e e y dependen s on SMEs, based on he added alue c ea ed o hem,
2
Small and medium-sized en e p ises: an o e iew, Eu os a , Eu opean Commission, upda ed o 11 No embe
2019, e ie ed on 15 Ap il 2020, a ailable in h ps://ec.eu opa.eu/eu os a /en/web/p oduc s-eu os a -news/-
/EDN-20191125-1
3
Wha is an SME?, Eu opean Commission, e ie ed on 15 Ap il 2020, a ailable in
h ps://ec.eu opa.eu/g ow h/smes/business- iendly-en i onmen /sme-de ini ion_es
4
La economía española es una de las más dependien es de oda Eu opa, Cepyme News, upda ed o 30 Janua y
2018, e ie ed on 15 Ap il 2020, a ailable in h ps://cepymenews.es/la-economia-espanola-una-las-mas-
dependien es-las-pymes- oda-eu opa
5
Ci as PYME ene o 2020; Minis e io de Indus ia, Come cio y Tu ismo; Gobie no de España; upda ed o
Feb ua y 2020, e ie ed on 15 Ap il 2020, a ailable in h p://www.ipyme.o g/Publicaciones/Ci asPYME-
ene o2020.pd
6
Small and medium-sized en e p ises: an o e iew, Eu os a , Eu opean Commission, upda ed o 11 No embe
2019, e ie ed on 15 Ap il 2020, a ailable in h ps://ec.eu opa.eu/eu os a /en/web/p oduc s-eu os a -news/-
/EDN-20191125-1
Company ca ego y
S a headcoun
Tu no e
o
Balance shee o al
Medium-sized
< 250
≤ € 50 m
≤ € 43 m
Small
< 50
≤ € 10 m
≤ € 10 m
Mic o
< 10
≤ € 2 m
≤ € 2 m
5
which comes o o 65% o he Spanish G oss Domes ic P oduc in ou coun y
7
. Howe e , i is,
some imes, di icul o ob ain ex e nal inancing, due o he low nego ia ing powe ha ha e
such en e p ises.
G aph 1: pe cen age o en e p ises in Spain by size
Sou ce: Own Elabo a ion om Minis e io de T abajo, Mig aciones y Segu idad Social
8
Added o he di icul y in ob aining inancing, his huge ne wo k o companies is mos ly
o med by mic o-en e p ises (in Spain ep esen s he 93%), among a e included sel -employed
wo ke s. The big deal o his en ep eneu ial o m is he lack o echnological de elopmen
which in ol es a limi a ion o p oduc i i y and economic g ow h
9
.
E en so, he coun ies a e awa e o he impo ance o hese companies wi hin he
business ne wo k and cu en ly, due o he global pandemic, hey a e ying o sa e hese
en e p ises h ough sou ces o unding which, a i s sigh , seem e y p o i able. These sou ces
will be subsequen ly in oduced and s udied.
7
La PYME española y el e o del c ecimien o, El Con idencial, e ie ed on 15 Ap il 2020, a ailable in
h ps://da os.elcon idencial.com/sage-6/
8
Ci as PYME ene o 2020; Minis e io de Indus ia, Come cio y Tu ismo; Gobie no de España; upda ed o
Feb ua y 2020, e ie ed on 15 Ap il 2020, a ailable in h p://www.ipyme.o g/Publicaciones/Ci asPYME-
ene o2020.pd
9
SÁNCHEZ MARÍN, G. (e . al.), 2018, Análisis es a égico pa a el desa ollo de la PYME en España:
digi alización y esponsabilidad social, Diego Ma ín, Mu cia, a ailable in h ps://www.cepyme.es/wp-
con en /uploads/2018/11/in o me-FAEDPYME-Espana-2018.pd
Au onomous
54%
Mic o
40%
Small
5%
Medium
0,85% G ea
0,16%
6
3. The issue o bank inancing
3.1. The yea s a e 2008 c isis
The inancial c isis o 2008 ma ked a u ning poin in he inancial ma ke place. Be o e
his his o ical ac , banking policy was ocused on inc easing he le el o indeb edness by
emi ing sho -and long- e m bank loans and c edi s wi hou any con ol. This, along wi h
o he easons, we e he onse o he housing ma ke bubble
10
.
Since ha momen , a pe iod o loss o con idence be ween SMEs and inancial
ins i u ions began. The di icul y in ge ing inancial p oduc s was expanded o e ime, due o
he inc easing o bu eauc a ic ed ape, he con ol o he inancial in o ma ion, he inc ease in
de aul s and ising cos s o ex e nal inancing. We can asse ha , un il he las yea s o he
second decade o he cu en cen u y, SMEs had many obs acles o p ese e hei inancial
equilib ium. In o de o compa e he ecosys em a ound he c isis wi h he las ew yea s, many
su eys exis . In pa icula , I shall use wo: he i s s udy was pe o med om 2009 o 2011
11
,
while he second one om 2016 o 2018
12
.
On he one hand, a he beginning o he c isis, SMEs ied o ge ex e nal inancing
(78.30% o hese businesses), bu his ac s a ed o dec ease (in 2011 i was only 67.75%),
which migh be owing o he ise in commissions and ixed expenses (67.68% expe imen ed a
ise in his ma e ), la ge quan i y o pe sonal gua an ees (which was becoming g ea e om
2009 o 2011), and highe in e es a e (61.60% o he SMEs expe imen ed a ise in in e es
a e in 2009).
In o he wo ds, due o he limi s imposed by banking ma ke , he e we e less mo i a ion
o selec his way o inancing. This implies ha Small and Medium-size businesses had o look
o o he sou ces o inancing such as in e nal inancial o hose ha will be exposed in his
disse a ion. In o de o cla i y he da a ema ked abo e his pa ag aph, he pe cen ages a e
10
MAUDOS, J., «El impac o de la c isis en el sis ema banca io español» (2012), Cuade nos de in o mación
económica, nº 226, 156
11
Encues a sob e el acceso de las pymes a la inanciación ajena, Consejo Supe io de Cáma as, 2011, e ie ed
on 17 Ap il 2020, a ailable in h ps://www.cama abilbao.com/ccb/con enidos.downloada .ac ion?id=8048397
12
VIII In o me sob e la inanciación de la pyme en España, CESGAR Sociedades de Ga an ía Recíp oca, 2019,
e ie ed on 17 Ap il 2020, a ailable in h p://www.cesga .es/wp-con en /uploads/2019/04/VIII-In o me-
inanciación-de-la-pyme.-Resul ados-2018-1.pd
7
shown in he g aphic 2, using an a i hme ic a e age pe yea ins ead o di iding hem by
qua e s.
G aph 2: su ey o SMEs abou bank inancing issues om 2008 o 2011
Sou ce: Own elabo a ion om Consejo Supe io de Cáma as, “Encues a sob e el acceso de las pymes a la
inanciación ajena”, 2011
13
3.2. Yea s be o e he imminen new c isis
On he o he hand, e e ing o he pe iod be ween 2016 and 2018, bank inancing, in
all i s a ious p oduc s and se ices, we e he a o i e way o inancing o SMEs. In 2018, he
20.6% o he Small and Medium-size businesses used bank loans, 28.2% bank discoun and
37.6% comme cial line o c edi ; his las one was he mos expanded.
In e e ence o he cause o he need o unds, i can say ha i is he main p oblem o
his pe iod due o he des ina ion o he unding was o lack o liquidi y, which means ha
mos o SMEs we e unable o cope wi h hei cu en liabili ies. Among all SMEs, only 36.7%
used he unding o in es in p oduc i e equipmen .
13
Encues a sob e el acceso de las pymes a la inanciación ajena, Consejo Supe io de Cáma as, 2011, e ie ed
on 17 Ap il 2020, a ailable in h ps://www.cama abilbao.com/ccb/con enidos.downloada .ac ion?id=8048397
78,70%
67,68%
61,60%
14,85%
78,30%
82,33%
67,78%
62,48%
12,75%
74,00%
82,40%
69,40%
65,15%
13,90%
67,75%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
SMEs? ha ?has?expe imen ed?a? ise?in?pe sonal
gua an ees
SMEs? ha ?has?expe imen ed?a? ise?in?comissions?and
ixed?expenses
SMEs? ha ?has?expe imen ed?a? ise?in?in e es ? a e
SMEs? ha ?has?no ?been?able? o?ge ? inancing
SMEs? ha ?has? ied? o?ge ?banking? inance
2011 2010 2009
14
no so impo an , bu ha a e Es onia, La ia and Geo gia he coun ies ha eplace hem
21
. In
o he wo ds, he e a e coun ies wi h low ansac ion olume whe e people make g ea e
in es men s in al e na i e inancing.
G aph 7: Online Al e na i e Finance Volume by Coun y 2017 (€million; Exc. UK)
Sou ce: Uni e si y o Camb idge
22
Acco ding o Uni e si y o Camb idge epo s ( he e a e se e al pape s each yea ) he
inance ma ke o he al e na i e inancing has been g owing pe manen ly on a yea - o-yea
basis du ing he examined pe iod ac oss he whole Eu opean Union a ea (including UK). The
a e age g ow h a e o al e na i e inancing is 146%, highligh ing he sec o ’s g ow h pace.
Al e na i e ways o inancing a e becoming mo e popula and mo e eadily accessible o he
public. Fu he mo e, he au ho o Fo bes a icle, Da id P osse (2018), s a es: «The numbe o
coun ies in Eu ope wi h meaning ul al e na i e inance ac i i y is g owing». He has made his
s a emen a e e iewing he 2015 UK benchma k epo . In addi ion, he numbe eached €7.7
billion in 2016 ( he mos ecen pe iod o which he da a was a ailable) wha app o es he
21
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance Benchma king epo ,
Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2019-05-4 h-
eu opean-al e na i e- inance-benchma king-indus y- epo -shi ing-pa adigms.pd
22
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance Benchma king epo ,
Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2019-05-4 h-
eu opean-al e na i e- inance-benchma king-indus y- epo -shi ing-pa adigms.pd

15
g ow h endency o he al e na i e inance ma ke . The dis ibu ion o hose numbe s is
ep esen ed below:
G aph 8: olumes o al e na i e inance ansac ions by Eu opean coun ies on 2014
(€ million)
Sou ce: Own Elabo a ion om Uni e si y o Camb idge
23
The g aph 8 shows ha he bigges sha e o he al e na i e inance ma ke in Eu ope
belonged o he Uni ed Kingdom wi h a esul o €2337 million in 2014. The lis was ollowed
by F ance (€154 million), Ge many (€140 million), Sweden (€107 million), he Ne he lands
(€78 million), and o he coun ies.
Cu en ly, he anking o coun ies has changed as i is shown in g aph 8, in which UK
is excluded. F ance is a he op o ansac ions olume wi h €661.37 million, ollowed by
23
WARDROP, R., e . al., Mo ing Mains eam: The Eu opean Al e na i e Finance Benchma king Repo ,
Uni e si y o Camb idge, Feb ua y 2015, e ie ed on Ma ch 2019, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2015-uk-
al e na i e- inance-benchma king- epo .pd
2337
154 140 107 78 62 22 17 12 8,2 43,6 2,5 2,5 2 1
0
500
1000
1500
2000
2500
UK
FRANCE
GERMANY
SWEDEN
THE NETHERLANDS
SPAIN
ESTONIA
FINLAND
SWITZERLAND
ITALY
POLAND
AUSTRIA
BELGIUM
DENMARK
CZECH REPUBLIC
SLOVAKIA
16
Ge many (€595.41 million), The Ne he lands (€279.93 million), I aly (€240.66 million),
Finland (€196.76 million), Sweden (€196.38 million), Geo gia (€173.28 million) and Spain
(€160.48 million). This means ha Spain has alls om i h place o eigh h in only h ee yea s.
Thank o his compa ison, i is plausible he ex emely as g ow h o his ma ke , so i is
assumed i s impo ance ole in he upcoming yea s. i will play an impo an ole in he nex
ew yea s.
Compa ing bo h g aphs abo e, mos o he coun ies ha e ipled hei olumes, while
coun ies like Spain has been o e come by se e al coun ies like I aly o Geo gia. I is ue he
quick e olu ion ha al e na i e inancing has su e ed, unless i a ises ano he ype o inancing
mo e s iking and bene icial, he g ow h cu e does no seem o s a a ecession.
Mo eo e , i is impo an o assess he alloca ion o money among he di e en ypes
o al e na i e inancing. Due o he same benchma king epo , he bigges and mos signi ican
pa o he al e na i e ma ke akes Pee - o-Pee Consume Lending. And he ollowing places
belong o In oice T ading, P2P Business Lending and Real Es a e C owd unding
24
.
P2P Consume Lending, he mos impo an al e na i e inancing model, eached a
olume o €1,392 million in 2017 which ep esen s an inc ease o 100% wi h 2016 (€697
million). In oice T ading has achie ed he second posi ion in olume wi h a o al o €536
million in 2017. The hi d is P2P Business Lending, wi h a o al o €467 million. I can be
s a ed ha al e na i e ways o inancing a e mo e common o consume s han o businesses.
E en so, he posi i e inc ease o models such as In oice T ading, p o es ha hese models a e
mo e and mo e impo an o companies.
The ull lis wi h he necessa y numbe s in 2016 is p esen ed below in g aph 9. I is
only included he mos impo an ways.
24
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance Benchma king epo ,
Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2019-05-4 h-
eu opean-al e na i e- inance-benchma king-indus y- epo -shi ing-pa adigms.pd
17
G aph 9: Al e na i e inance ma ke alloca ion in Eu ope (2016-2017)
Sou ce: Uni e si y o Camb idge
Acco ding o Fo bes (2018), he se ices om al e na i e inance ha e helped o aise
signi ican sums o he Small and Medium En e p ises, p o iding €1.14 billion (whe e deb
ypes including pee - o-pee business lending made o 67% o business inance, while equi y-
based ypes made 27%) o mo e han 14,000 businesses ac oss Eu ope
25
, ha shows he
impo ance o al e na i e inance o Small and Medium En e p ises in Eu ope.
4.4. The di e ence be ween Eu ope and Spain
A he beginning, in Eu ope P2P Consume Lending was mo e common han P2P
Business Lending, which demons a ed he p e alen use o al e na i e inancing o
consume s, a he han business. In he case o Spain, da a we e o ally con a y, meaning ha
he al e na i e inance ecosys em was business- ocused ac i i ies
26
. To emphasize his posi ion,
25
PROSSER, D., Eu ope’s Al e na i e Finance Sec o Accele a es, upda ed o Janua y 26, 2018, e ie ed on
Ap il 27, 2020, a ailable in h ps://www. o bes.com/si es/da idp osse /2018/01/26/eu opes-al e na i e- inance-
sec o -accele a es/#33d3 b183d96
26
ZIEGLER, T. e . al., The 3 d Eu opean Al e na i e Finance Indus y Repo , Uni e si y o Camb idge, 2018,
e ie ed on Ma ch 2019, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2018-cca -
exp-ho izons.pd
95
191
211
259
467
536
1392
59
159
219
109
350
252
697
0200 400 600 800 1000 1200 1400 1600
P2P3P ope y3Lending
Rewa d-based3C owd unding
Equi y-based3C owd unding
Real3Es a e3C owd unding
P2P3Business3Lending
In oice3T ading
P2P3Consume 3Lending
2016 2017
18
he olume o P2P Consume Lending was o ally insigni ican wi h an amoun o 2M€. And
wha i is mo e, he e was any inc ease be ween 2015-2016.
In connec ion wi h o al olume o ansac ions, i can be s a ed ha , in ela i e e ms,
his me hod o ob ain unds we e mo e impo an o SMEs in Spain han in o he coun ies o
Eu ope whe e money was in es ed o ob ain a p o i h ough a pla o m o c owdlending o
cos ume s.
Mo eo e , in Spain, In oice T ading was also g owing ma ke . On one hand, as i is
showed in g aph 10, i is clea ha people we e in es ing la ge sums o money in in oice
discoun ing o ac o ing (in 2017, he olume o In oice T ading is double ha he p e ious
yea ). On he o he hand, SMEs we e using hese ways o ge inance, especially o aise hei
cu en a io, which is he mos impo an p oblem due o hei necessi y o wo king capi al. I
is ex emely impo an o highligh he necessi y o posi i e cash low in hese companies. As
a gene al ule, because o he low nego ia ing powe wi h ega d o hei supplie s and clien s,
he pay pe iod is less han days sales ou s anding ( his e m e e s o e ec i e collec ion), so i
is possible o ha e lack o liquidi y.
As i is showed in g aph 4, SMEs ind mo e p oblems in 2018 han in 2017 o 2016,
which s a es ha he e is a need which has o be co e ed. And ha is he poin whe e al e na i e
ways o inancing comes in. I can be also seen he mo e he yea s inc ease, he g ea e he
olume o ansac ions is, which does no hing bu a i m he boom o al e na i e inance agains
bank inancing.
Howe e , in 2017 he inancial ecosys em has changed. P2P Consume Lending has
expe imen ed an ex ao dina y g ow h, esembling he Eu opean model, which could be a
e lec ion o he ease wi h which e e yone can access o his ype o unds (which is di e en
om he same being g an ed). I also has o wa n ha he olume o P2P Business Lending in
2017 migh no be eal, due o he ac ha pla o m Comuni e.com shu down, so he da a o
his pla o m a e no accumula ed
27
. In p ac ical e ms, c owd unding loans a e he mos
27
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance Benchma king epo ,
Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2019-05-4 h-
eu opean-al e na i e- inance-benchma king-indus y- epo -shi ing-pa adigms.pd
19
impo an in Spain ( he sum o P2P Business Lending and P2P Consume Lending), and i may
be highe han wha g aph 10 shows. Finally, i is impo an o name Real Es a e C owd unding
and P2P P ope y Lending; o example, Spain has always been a coun y wi h a g ea eal
es a e adi ion, his sec o is g owing again
28
and he e ec is seen in he g aph.
G aph 10: To al Al e na i e Finance Volume by Model in Spain 2016-2017 (in millions o
€)
Sou ce: Own Elabo a ion om Uni e si y o Camb idge
29
28
C owd unding in Spain 2018, Annual Repo , upda ed o 2019, e ie ed on Ap il 23, 2020, a ailable on
h ps://www.uni e soc owd unding.com/wp-con en /uploads/UC_In o me-anual-del-C owd unding-ES-EN-
2018_XX92-FO2P-XZA1-32IK.pd
29
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance Benchma king epo ,
Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e- inance/downloads/2019-05-4 h-
eu opean-al e na i e- inance-benchma king-indus y- epo -shi ing-pa adigms.pd
0,3
13,2
18,4
10,1
30,8
31,6
42,7
26
13,6
0
21,2
14,4
2
44,5
0 5 10 15 20 25 30 35 40 45 50
Real3Es a e3C owd unding
Rewa d-based3C owd unding
P2P3P ope y3Lending
Equi y-based3C owd unding
In oice3T ading
P2P3Consume 3Lending
P2P3Business3Lending
2016 2017

20
5. Al e na i e inancing o SMEs and S a -ups
The le el o al e na i e inance ma ke o Small and Medium En e p ises in Eu ope is
g owing, as i has seen on he p e ious chap e . The e is a segmen o SMEs ha appeals o
al e na i e inancing mo e o en han he o he segmen s, and his segmen belongs o s a -
ups.
A s a -up is a concep ha has appea ed ela i ely ecen ly in he inancial wo ld. I
widely ep esen s a young company ha has jus begun o de elop and i s size is small.
Acco ding o he au ho o Fo bes a icles, a s a -up is a company ha wo ks o sol e a p oblem
wi h some kind o solu ion on he ma ke whe e he solu ion is no ob ious and success is no
gua an eed
30
. The di e ence be ween SME and s a -up is ha s a -ups a e de ined as
“ empo a y o ganisa ion ha is sea ching o epea able and scalable business model”
31
, so he
di e ence lies on he main eason o i s c ea ion and he ision o i s c ea o s.
The aim o s a -ups is g owing h ough dis up i e inno a ions; ne e heless, due o
hei high deg ee o unce ain y, ge ing unding om adi ional inancing sou ces becomes
ha de o hem
32
.
5.1. Risks associa ed wi h s a -ups
In he pas ew yea s, isk managemen in companies has been gaining impo ance,
especially due o he si ua ion o widesp ead unce ain y ha he wo ld is expe iencing. This
si ua ion is accen ua ed pa icula ly in a s a -up, o e iden easons: he e is no alida ed
business model, an insu icien numbe o cus ome s, no inancial bu e no s able cash lows.
Regula company aces a di e si y o isks, in his pape wo o hem will be explained
o hei impo ance ela ed o s a -ups:
- Ma ke isk
- Liquidi y isk
30
ROBEHMED, S., Wha Is A S a up?, Fo bes, upda ed o Decembe 16, 203, e ie ed on Ma ch, 2020,
a ailable in h ps://www. o bes.com/si es/na alie obehmed/2013/12/16/wha -is-a-s a up/#5d80bd9b4044
31
BLANK, S., Wha ’s a S a up? Fi s P inciples, upda ed o Janua y 25, 2010, e ie ed on May 2020,
a ailable in h ps://s e eblank.com/2010/01/25/wha s-a-s a up- i s -p inciples/
32
Wha is he Di e ence Be ween a S a -up and a SME, Bajaj Finse , e ie ed on Ma ch, 2019, a ailable in
h ps://www.bajaj inse .in/insigh s/wha -is-di e ence-be ween-a-s a -up-and-an-sme
21
Fi s o all, when a company aces liquidi y isk, i is unable o mee he sho - e m
liabili ies, due o his ac , he SMEs asse s some imes a e no sui able o wo k as colla e al.
Talking abou liquidi y isk i is eliable o men ion he ope a ional isk. This kind o isk is
unde aken by companies who y o a emp o ope a e in unknown o new ma ke s; o his
eason, i is an issue which mos o he s a -ups aces a he beginning o hei exis ence. The
ques ion ha any company should ask hemsel es o o e come gene al ope a ional isk is: Is
he e a misma ch be ween supply and demand o he new p oduc /se ice he company is
o e ing?
Ma ke isk, also known as sys ema ic isk, is he possibili y o losing an in es men due o
ma ke luc ua ions. I encloses di e en isk economic ac o s such as in la ion, in e es a e
and cu ency isks.
S a -ups and SMEs a e especially ulne able, as hey ha e a educed en e p ise size
and a concen a ed asse base, so a sligh change in any o he isk componen s migh ha e
dange ous consequences.
Al hough isk mi iga ion is achie able h ough by ge ing help om ou side o he
o ganisa ion and p ope in e nal con ol, in he case o inancial ins i u ions hey will s ill be
eluc an o p o ide inancing, which means i is di icul ge ing help o a bank. None heless,
i is necessa y o men ion ha he co e ac i i y o banks has ne e been o inance s a -ups, as
hei lines o ac ion end o be mo e conse a i e and isk a e se.
Basically, he isks ha we e desc ibed abo e a e he main eason o banks no o in es
in s a -ups. They a e conside ed oo isky; hence, he p obabili y o s a -up being inanced by
a inancial ins i u ion is basically non-exis ing. Howe e , gene al isks a e no he only cause
o denial, as banks and inancial ins i u ions always ac unde a low isk p o ile.
In p o essional business, i he company does no ha e a leas one yea o wo k expe ience
in i s p o ession, i is common o banks o deny unding. In he same way, i he owne /owne s
do no ha e enough expe ise o an expe ienced managemen eam, a lende would no eel
com o able wi h such a company. And inally, he las eason o c edi ejec ion would be he
lack o a s able cus ome base. This is, basically, he main p oblems s a -ups o SMEs can ind
o ge unds.
22
I is compulso y o s a -ups o be awa e o he impo ance o isk mi iga ion and isk
managemen . Resea ch by (Hi h & Chelsey, 2017)
33
concluded ha e ec i e isk managemen
is suppo ed by i e pilla s: Go e nance and cul u e, S a egy and Objec i e-se ing,
Pe o mance, Re iew and Re ision and In o ma ion, Communica ion and Repo ing. The
compliance wi h hese isk managemen c i e ia will aid a s a -up o unde s and he isk aken
and will possibly ha e a mo e s able u u e. Po en ial in es o s a e in e es ed in he isk le el
o he company, o assess he wo hiness o hei in es men .
5.2. Con as be ween adi ional lending and al e na i e inancing oppo uni ies
Nowadays, he e a e many di e en inancing op ions ins ead o bank inancing. In
Spain, in o de o ha e a bank loan, he e a e equi emen s ha end o make i di icul ,
especially when we a e alking abou SMEs. Fo ins ance, bank equi emen s o a p i a e
in es men in Spain equi e he insu ed pe son o sign a li e insu ance in which he bene icia y
is he bank, pay he no a y o gi e a pe sonal endo semen gua an ee o co e insol encies. The
ba ie s and bu eauc a ic p ocesses in ol ed in asking o a o mal c edi o a inancial
ins i u ion end o be leng hy and edious.
In his scena io, we could name o he mo e ecen inancing ehicles, such us
c owdlending, en u e capi al o business angels, gi ing an o e iew o he mos impo an
di e ences be ween hem and s aigh deb o bank loans. Online al e na i e inance channels
ha e become an inc easingly impo an conduc o SME inancing in he UK. Acco ding o
Zhang e al., (2018)
34
in 2017, £4.2 billion o business unding, which is 68% o he o al ma ke
olume o al e na i e inance, was aised ia online pla o ms and channelled o s a -ups and
SMEs ac oss he coun y.
Fi s ly, we mus emphasize ha c owd unding is he mos ex ended way o inancing
in hese days, as well as i is ha ing he majo g ow h. The e is an upwa d end ha al e na i e
in es men oppo uni ies ha e been expe iencing in Eu ope. Uni ed Kingdom has he mos
p ominen al e na i e inancing ma ke in he Eu opean Union, wi h a ma ke olume in 2017
33
HIRTH, R. & CHELSEY, D., En e p ise Risk Managemen : In eg a ing wi h S a egy and Pe o mance, June
2017, e ie ed on Ma ch 2019, a ailable in h ps://www.coso.o g/Documen s/2017-COSO-ERM-In eg a ing-
wi h-S a egy-and-Pe o mance-Execu i e-Summa y.pd
34
ZHANG, B., e . al., The 5 h UK Al e na i e Finance Indus y Repo , Uni e si y o Camb idge, No embe
2018, e ie ed on Ma ch 2019, a ailable in h ps://www.jbs.cam.ac.uk/ acul y- esea ch/cen es/al e na i e-
inance/publica ions/5 h-uk-al e na i e- inance-indus y- epo /#.X QC8S8 xQI
23
o 6.19 billion
35
. As one o he pionee s in popula izing al e na i e inancial oppo uni ies
among Eu opean Coun ies, he ma ke has ma u ed, and he apid g ow h o ea lie yea s has
slowed down. Ne e heless, 2017 ma ked he se en h consecu i e yea o subs an i e ma ke
g ow h o he UK al e na i e inance indus y, wi h he online al e na i e inance ma ke
g owing.
Wi h c owdlending, a o m o c owd unding, i is ypically easie o nego ia e he
in e es a e, he ma u i ies and he necessi y o no o a pe sonal gua an ee o colla e al han
wi h bank lending. T anspa ency is ano he issue; a company ha wan o engage in
c owdlending will ha e o publish a lo o ‘con iden ial’ in o ma ion on he pla o m o be able
o a ac in es o s. Also, in case o inancial p oblems a he company, he news will sp ead
e y quickly.
Ven u e Capi al has become a sui able al e na i e o s a -ups and small companies
unding. I is composed o in es o s ha p o ide inancing o ecen ly es ablished companies
ha a e o ecas ed o ha e a subs an ial g ow h po en ial in he long un. Ven u e Capi al
usually comes om specialized in es men unds o weal hy in es o s looking o a aluable
endowmen .
When analysing he unding s ages o a s a -up h ough Ven u e Capi al, i is impo an
o emphasize he p ocess and wha each unding s age comp ises. Ea ly s age unding (Se ies
A&B) ha e a capi al in es men anging om $1 million o $6 million, depending on he
de elopmen deg ee o he s a -up. These ope a ions a e usually led by en u e capi al unds.
The g ow h s age includes bo h he C se ies and subsequen ounds, inco po a ing he
mezzanine capi al ounds, a hyb id inancing ins umen unusual among s a -ups ha is
hal way be ween deb and capi al, and he combina ion o hese s ages c ea e a b idge o IPO
o ano he exi s a egy. Exi s a egies migh include an IPO, o M&A wi h ano he company.
The las one, Business Angels, is a kind o inance whe e indi iduals in es bo h hei
expe ise and money in o small businesses o help hem g ow and achie e success in e u n o
sha es in he company. On a high le el, hey a e ocused on ea ly s age companies wi h high
g ow h po en ial and scalable business model, wi h a s ong chance o good e u ns.
35
ZHANG, B., e . al., The 5 h UK Al e na i e Finance Indus y Repo , Uni e si y o Camb idge, No embe
2018, e ie ed on Ma ch 2019, a ailable in h ps://www.jbs.cam.ac.uk/ acul y- esea ch/cen es/al e na i e-
inance/publica ions/5 h-uk-al e na i e- inance-indus y- epo /#.X QC8S8 xQI
30
in e es ed in knowing he p ojec by i s c ea o , so he one in cha ge has o explain he p ojec ,
and his is he bes way o know his ambi ion.
Some imes, i is e y impo an knowing he s a opinion, using eedback as a o m o
knowledge. This is he mos impo an ac o in he c i e ia o a Business Angel
48
.
- G ow h po en ial
A his poin , he in es o s ocus on he po en ial o he p oduc in he ma ke . I is
impo an o conduc a compe i o analysis and wha is mo e, is c ucial knowing he ma ke
and hei cus ome s, as well as he exis ing echnology. Linked o his idea, he s a -up mus
be able o do a sma use o echnology, a esh pe spec i e o wha al eady exis s in he ma ke .
Pu ing hese ideas oge he , he s a -up can ha e he abili y o scale and sus ain in he long
e m, making use o a good business plan.
- Idea/concep
Some imes, he idea i sel is so inno a i e and c ea i e ha is he only necessa y hing
o a ac he a en ion o he in es o s. In hese imes, due o he g ea echnological
de elopmen , en i ely new ideas may eme ge wi hou equi ing la ge amoun s o inno a ion,
which means using cu en echnology in o he sec o s.
The e is ano he possibili y o co e he ma ke and gain a sus ainable compe i i e
ad an age. This possibili y lies in he c ea ion o a new dis up i e echnology, which means
he old ones a e ou o da e, leading o o al success in he ma ke .
In any case, in addi ion o an excellen idea o concep , i is necessa y ha ing he o he
c i e ia.
- Quali y o he business plan
The business plan is he company’s oadmap, he pape in which he objec i es, alues,
p inciples and ambi ions a e b oken down. I is he e whe e he ounde and his eam answe
ques ions like how hey a e going o de elop he s a -up, how is going o be he p oduc , which
48
S a is ics Compendium Eu opean Ea ly S age Ma ke S a is ics 2018, EBAN, upda ed o 2019, e ie ed on
May 15, 2020, a ailable in
h p://eban.img.mus c1.ne /s a ic/90357/documen i/ConsoleDocumen s/S a is ics%202018%20Compendium%2
0-%20FINAL.pd

31
echnology hey a e going o use, which a ge ma ke is he p oduc going o be ocused on,
e c. Tha is, a his poin he ounde e lec s wha he wan s o do and how he wan s o do i .
Thanks o he Eu opean Commission, i is possible o know how hese ac o s in luence
in es o ’s decision and i is shown in he g aph below:
G aph 13: Decisi e ac o s o s a an in es men
Sou ce: Own Elabo a ion om EBAN
49
The eam is he mos impo an ac o s o in es , which means in es o s ocus hei
a en ion on pe sonal skills, alues, eamwo k o leade ship. The indi idual who is in cha ge
has go he p essu e o lead he way o success, and ha is wha c ea es added alue o
ex e nal unde s. This cha ac e is ic ep esen s nea ly 90% o he impo ance decla ed o his
kind o in es o .
G ow h po en ial, as well as he idea, i is no so signi ican , app oxima ely 50%. This
depends on he ma ke whe e he business is going o ope a e, ha is o say, i is an ex e nal
isk. Finally, he quali y o he business plan only ep esen s a 25%.
49
S a is ics Compendium Eu opean Ea ly S age Ma ke S a is ics 2018, EBAN, upda ed o 2019, e ie ed on
May 15, 2020, a ailable in
h p://eban.img.mus c1.ne /s a ic/90357/documen i/ConsoleDocumen s/S a is ics%202018%20Compendium%2
0-%20FINAL.pd
24%
50%
51%
90%
0% 20% 40% 60% 80% 100%
Quali y3o 3Business3Plan
Idea3/3Concep
G ow h3Po en ial
Team
32
I is concluded ha i is mo e impo an he in e nal isks han ex e nal isks. The
po en ial o a SME o s a -up was bo n om he union o he eam, and i is c i ical o he
success o a new company.
5.5. Why do s a -ups choose new unding o e adi ional bank loans? The success
ac o s o al e na i e inancing.
A s a -up equi es some kind o ini ial in es men in o de o s a and e ec i ely
de elop i s business. Each s a -up is looking o di e en ways o unding i sel . And we
al eady know, ha in o de o do so, mos o hem ely on al e na i e inancing me hods.
P e iously, i was men ioned ha he Eu opean al e na i e unding ecosys em has been
cons an ly inc easing i s sha e on he yea - o-yea basis. Now, we’ll y o answe he esea ch
ques ion: “Wha a e he success ac o s o he inc ease in new ways o inancing o SMEs?”
The e migh be inde ini e easons why; howe e , he mos impo an ones will be lis ed
and desc ibed onwa ds.
Al e na i e inancing oppo uni ies like Ven u e Capi al, Business Angels and
c owd unding do no only p o ide he company wi h su icien unding o s a hei ope a ions,
bu allow he s a -ups o aise awa eness and ha e a g ea e isibili y in he ma ke . Fo
ins ance, a unc ioning c owd unding campaign is a sui able way o in oduce a s a -up’s
gene al mission and objec i es o he ma ke , as i is a ee and simple app oach o each many
channels.
Ano he success ac o o he al e na i e ways o inancing is he le el o he in e es
a e ha is being cha ged o he s a -up. The in e es a e in al e na i e inancing is conside ed
o be lowe han o he adi ional bank loans. Fo su e, he a e di e ences also depend on he
ypes o he in es men , egula ions, and he coun y whe e he s a -up is based in.
Resea ch in he ield o pee - o-pee lending has been ca ied ou o be able o compa e
he esul s wi h a es p o ided by banks. To be mo e p ecise, he UK P2P pla o m named Zopa
and he UK bigges bank named Hongkong and Shanghai Banking Co po a ion (HSBC) ha e
been used o ha pu pose.
The Zopa pla o m o e s he pee - o-pee loans o maximum amoun o 25,000 pounds
o a company. In 2019, he in e es a e a ied be ween 3.3% o 3.5% depending on he loan
33
amoun . Fo example, he APR (annual pe cen age a e) o he maximum amoun wi h he
epaymen pe iod o i e yea s is 3.5%
50
. And he APR o he pe sonal loan o he same
amoun unde he same condi ions is 6.7% bo owed by HSBC
51
.
In e e ence o Spain, he in e es a e a ies ega ding loan isk, especially on
c owdlending pla o ms. Fo ha eason, due o he ac ha i is o ally impossible o know
his pe cen age, he able below shows he a e age in e es a e o each en i y. The compa ison
is be ween he wo mos impo an banks in Spain, and wo o he mos enowned c owdlending
pla o ms.
Table 3: A e age in e es a e o loans (upda ed o 2020)
LENDER
INTEREST RATE
Banco San ande 52
6,75%
BBVA53
5,55%
My ipleA54
3,76%
Youni edC edi 55
5,75%
Sou ce: Own Elabo a ion om Banco San ande , BBVA, My ipleA and HelpMyCash
In e ms o in e es a e, s a -ups migh choose o und hei companies h ough new
ins umen s, as he in e es a e aspec is bene icial o , in he wo s case, e y simila o bank
loans.
Conce ns he di e ences in equi emen s ela ed o adi ional and al e na i e ways o
inancing. In majo cases, o s a -ups i is ha de o ollow and ul ill he equi emen s o he
bank. Fo ins ance, in he mos coun ies he equi emen s o aking a bank loan a e ollowing:
- A company has o ha e a good c edi sco e;
50
Deb consolida ion loans – See a es & apply, Zopa, upda ed o 2020, e ie ed on Ma ch, 2019, a ailable in
h ps://www.zopa.com/loans
51
(“Pe sonal Loans | Pe sonal Loan Calcula o , HSBC UK, upda ed o 2020, e ie ed on Ma ch, 2019, a ailable
in h ps://www.hsbc.co.uk/loans/p oduc s/pe sonal/
52
P és amo P o esional 1|2|3, Banco San ande , upda ed o 2020, e ie ed on May, 2020, a ailable in
h ps://www.bancosan ande .es/es/emp esas/ inanciacion/an icipo- ac u as- inanciacion-dia-a-dia/p es amo-
p o esional
53
P és amos Online Negocios, BBVA, upda ed o 2020, e ie ed on May 28, 2020, a ailable in
h ps://www.bb a.es/emp esas/p oduc os/ inanciacion/p es amo-pa a-negocios.h ml
54
P és amos pa a Emp esas y Negocios Españoles, My ipleA, upda ed o Decembe , 2019, e ie ed on May
28, 2020, a ailable in h ps://www.my iplea.com/ inanciacion-emp esas/p es amos/
55
P és amo P2P Youni ed C edi , HelpMyCash, upda ed o May 28, 2020, e ie ed on May 29, 2020, a ailable
in h ps://www.helpmycash.com/c edi os/youni ed-c edi /p es amo-p2p-youni ed-c edi /
34
- To quali y o a small business loan, he company should ha e a leas one-yea
business his o y;
- The company should make a leas $50,000 e enue a yea ;
- The o al income should be a leas 1.25 imes highe han he o al expense;
- The company should ha e some colla e al o apply o a bank loan;
- The company should speci y, how exac ly does i plan o use he money i asks.
As an al e na i e o he bank loan, c owd unding equi emen s could be aken as an
example o al e na i e inance demands. The ollowing equisi es a e e ie ed om he Czech
c owd unding pla o m named Hi Hi .cz:
- Regis e on he pla o m and desc ibe he idea o he s a -up using he ips
p o ided on he web page o he pla o m;
- Gi e as much in o ma ion abou he s a -up i sel as possible;
- Se a a ge ime o ge a unding and se he amoun ha he company will ask
56
.
Compa ing bo h c i e ia, i is impo an o emphasize ha c owd unding ocuses in
mo e quali a i e and subjec i e aspec s, gi ing less impo ance o epaymen abili ies. A s a
up migh ind i easie o comply wi h c owd unding equisi es.
The o he ad an age o al e na i e inancing is he ime ame om applying o
ecei ing unding. The ime ha he company akes o p epa e all he manda o y documen s
and eedback is abou 60 o 90 days
57
. Mo eo e , bu eauc a ic p ocesses when applying o
c edi end o be leng hy and edious. While in he case o c owd unding o pee - o-pee
lending, ime depends mos ly on he company i sel . In gene al, i akes a ound 2 o 3 days o
ga he all he in o ma ion ha he pla o ms equi e. Fu he mo e, he ime o collec ion money
pe iod a ies. I depends on such ac o s as he a ac i eness o he idea, he ewa d le el (o
he le el o he in e es a e), cus ome s’ p e e ences, and many o he ac o s. Mos ly i is abou
30 o 45 days.
The ime speed o he p ocess o g an ing he money h ough al e na i e ways o
inancing is he o he successo ha migh ha e caused he inc ease in popula i y o he
al e na i e ways o inancing.
56
Hi Hi , How does i wo k, e ie ed on Ma ch 2020, a ailable in
h ps://www.hi hi .com/en/a icle/howHi hi Wo ks
57
BALLE, L., How Long Does I Take o Ge an SBA Loan?, Ch on, e ie ed on Ma ch, 2020, a ailable in
h ps://smallbusiness.ch on.com/long-sba-loan-17359.h ml
35
5.6. Al e na i e inancing ends o s a -ups
Bank-company ela ionships a e s ill e y common, bu no long ago, i was usual o
ha e a li elong ela ionship wi h only one bank. Today, SMEs and especially, mic o-en e p ises
ag ee o ha e ela ionships wi h mo e banks, in a e age up o h ee. Co po a ions o bigge
en e p ises end o be ela ed o a highe numbe o inancial ins i u ions
58
. Acco ding o
Fielding and Fleming (2016) banks can handle only 7% o p oduc s digi ally om end o end
59
.
The es ablishmen o new digi al banks and decen alized ma ke places incen i es
SMEs and s a -ups o y hei p oduc o e ings. Re olu , N26 and BNex
60
a e examples o
digi al banks ha o e inancial ins umen s apa om digi al banking, such as loans,
mo gages, and inancial ad ice. Banks mus make in es men s in digi al lending mo e
e ec i e i hey wan o a oid a subs an ial decline in p o i s.
Acco ding o Fo bes magazine, he inno a ion s a egies o he g ea es Spanish banks
a e ocused on Fin ech. The objec i e is ha mos inancial p oduc s (such us pe sonal loans,
c edi lines, mo gages) a e con ac ed by compu e applica ion as well as dec ease he use o
b anches. BBVA, o example, o e s 92% o his p oduc s online and i can be con ac ed wi h
jus one click
61
.
As a ule,, inancial ins i u ions e used o collabo a e wi h FinTechs. Bu , in he las
ew yea s, banks collabo a e wi h Fin ech companies and y o c ea e a pe sonalized
expe ience h ough he delega ion o speci ic ac ions. Acco ding o PwC,
62
banking and
paymen s indus ies o e palpable examples o FinTechs changing he inancial sec o by
o e ing new solu ions ha a e isibly dis u bing adi ional playe s
58
WEHINGER, G. & KAOUSAR NASSR, I. (2015), “Unlocking SME inance h ough ma ke -based deb :
Secu i isa ion, p i a e placemen s and bonds, OECD Jou nal: Financial Ma ke T ends, ol. 2014, issue 2, 89-
190
59
FLEMING, R. & FIELDING, J., How Banks Can Accele a e Digi al Lending, Fo bes, upda ed o Ma ch 2,
2016, e ie ed on Ma ch, 2019, a ailable in h ps://www. o bes.com/si es/baininsigh s/2016/03/02/how-banks-
can-accele a e-digi al-lending/
60
GARAUS, N., ¿Qué bancos “ in ech” ope an en España ac ualmen e?, HelpMyCash, up ade o July 1, 2019,
e ie ed on 23 May, 2020, a ailable in h ps://www.helpmycash.com/blog/que-bancos- in ech-ope an-en-
espana-ac ualmen e/
61
TOCA, G., Las es a egias de inno ación de los g andes bancos españoles, Fo bes, upda ed o Ap il 20, 2018,
e ie ed on 23 May, 2020, a ailable in h ps:// o bes.es/emp esas/41970/las-es a egias-de-inno acion-de-los-
g andes-bancos-espanoles/
62
Beyond au oma ed ad ice: How FinTech is shaping asse & weal h managemen , PWC, upda ed o 2016,
e ie ed on Ma ch, 2019, a ailable in h ps://www.pwc.com/gx/en/ inancial-se ices/pd / in- ech-asse -and-
weal h-managemen .pd

36
6. The cu en unding in Spain: an unp eceden ed si ua ion
I is a ac ha he cu en heal h c isis because o Co id-19 i us, which a ec s he
wo ld equally, is changing he way o inancing SMEs. Go e nmen s ha e ac ed in esponse
o he need o liquidi y su ounding SMEs and he sel -employed.
Fo example, in Spain, he go e nmen has alloca ed 57.852 million eu os o ICO loans
in he cu en yea , mos o hem o help he en i ies p e iously named
63
. This kind o loans
exis s yea s ago, bu i s use was no widesp ead. In 2018 he o al o inancing issue was 2.500
million eu os
64
, meanwhile in 2019 he olume was o 4.780 million eu os, which means a 92%
pe cen age inc ease
65
.
Howe e , as we can no ice o he measu es aken by he Spanish go e nmen since he
beginning o he c isis, , his way o inancing has inc eased a lo , speci ically beyond wel e
imes he p e ious olume. This is no su p ising acco ding o he special measu es decla ed in
Ma ch, bu i is clea ha he e will be an impac in he olume o al e na i e inancing used
o SMEs. In his case, ega ding cha 11 da a, he e is mo e olume han P2P Business
Lending.
G aph 14: olume o ICO loans in Spain (in million €)
Sou ce: Own Elabo a ion om Ins i u o de C édi o O icial
63
El ICO mo iliza 57.852 millones de inanciación pa a au ónomos y emp esas en 462-600 ope aciones
a aladas, Eu opa P ess, upda ed o May 26, 2020, e ie ed on May 27, 2020, a ailable in
h ps://www.eu opap ess.es/economia/ inanzas-00340/no icia-ico-mo iliza-57852-millones- inanciacion-
au onomos-emp esas-462600-ope aciones-a aladas-20200526114812.h ml
64
El ICO mejo a las condiciones de las Líneas ICO 2019 pa a adap a se a las necesidades de inanciación de
emp esas, pymes y au ónomos; Gobie no de España, Ins i u o de C édi o O icial, upda ed o Feb ua y 2, 2019,
e ie ed on May 20, 2020, a ailable in h ps://www.ico.es/web/ico/no as-de-p ensa/-/blogs/l-ico-mejo a-las-
condiciones-de-las-lineas-ico-2019-pa a-adap a se-a-las-necesidades-de- inanciacion-de-emp esas-pymes-y-
au onomos
65
El ICO o o gó más de 4.780 millones de eu os pa a inancia la ac i idad de au ónomos y emp esas españolas
a a és de sus líneas en 2019; Gobie no de España, Ins i u o de C édi o O icial, upda ed o Janua y 9, 2020,
e ie ed on May 20, 2020, a ailable in h ps://www.ico.es/web/ico/no as-de-p ensa/-/blogs/el-ico-o o go-mas-
de-4-780-millones-de-eu os-pa a- inancia -la-ac i idad-de-au onomos-y-emp esas-espanolas-a- a es-de-sus-
lineas-en-2019
2500 4780
57852
0
10000
20000
30000
40000
50000
60000
70000
2018 2019 2020
37
The good ecep ion o hese unds is based on ou ex emes:
• All ICO loans ha e a Go e nmen al gua an ee, al hough no o he whole. Fo SMEs
and sel -employed, his gua an ee co e s a 80% o he p incipal o he loan (no
commissions o in e es s). In he case o non-SME companies, his gua an ee co e s a
70% o he same concep
66
.
• These loans ha e a g ace yea , which means ha he i s yea only pays he in e es bu
no he p incipal.
• The maximum e m o he loan is i e yea s.
• Finally, he in e es a e is he lowes in he whole ma ke . In Ap il, o SMEs i was
1’5% mo e o less, and o sel -employed 2’5%
67
.
Ob iously, he mos impo an aspec o hese inancing is he li le isk in ol ed o
bo h he company and he bank. In case o non-paymen , he bank would jus ha e o ace he
20% o which he company esponds. Fo ha eason, i is o ally unde s andable ha
companies wan o ge in o deb h ough his way.
Howe e , i is wo ying how quickly many loans ha e been accep ed, which could be
a sign ha hey ha e been g an ed complacen ly, inc easing he isk o he S a e and, wha is
mo e, inc easing deb le els in case o de aul s.
Finally, wha should happen in he con ex o he pandemic in which we ind ou sel es
a e wo mon hs in which he economy wo ks hal way, is he slump in al e na i e unding
le els in compa ison o he le els o he ICO lines.
66
Líneas A ales Co id-19, Gobie no de España, Ins i u o de C édi o O icial, 2020, e ie ed on May 20, 2020,
a ailable in h ps://www.ico.es/web/ico/linea-a ales
67
ALBA, C., Los au ónomos eclaman que el ICO limi e el ipo de in e és del c édi o a alado de la banca, El
Español, upda ed o Ap il 7, 2020, e ie ed on 20 May, 2020, a ailable in
h ps://www.elespanol.com/in e ia/emp esas/banca/20200407/au onomos- eclaman-ico-limi e-in e es-c edi o-
a alado/480453306_0.h ml
38
7. A case s udy o success and p ac ical p oblems
In o de o highligh he easons o he inc ease in popula i y o new ways o inancing
o s a -ups and SMEs, we will analyse wo case s udies. The companies selec ed a e SMS
Ibé ica S.L (SME) and Wa by Pa ke (s a -up), he i s is an example o how adi ional deb
inancing migh slow down company g ow h, and he second ep esen s a success case o a
s a -up company ha hanks o en u e capi al had he chance o de elop a pe sis en a es.
7.1. SMS Ibé ica, S.L.
SMS Ibé ica, S.L. is a Spanish limi ed liabili y company ounded in 2014 in Cua e de
Hue a, Za agoza. The objec o he company is double: he making o alse me al ceilings as
well as en ila ed acades, and he buying and selling o second-hand ehicles. The in o ma ion
used is hanks o he adminis a o o he en e p ise who has gi en i s consen , p o iding he
annual accoun s.
The ne amoun o u no e o SMS Ibe ica S.L. is €1.13 million
68
. The i s hing ha
s ands ou is he highe banking deb in he sho e m (€88,480) compa ed wi h he long e m
(€38,333). The company migh ace a liquidi y p oblem in he sho e m, as hei cu en a io
is 1.15. (Cu en asse s: €194,900; Cu en Liabili ies: €168,300).
The deb a io is heal hy: 1.6, bu he issue is ha he majo i y o equi y is comp ised
o no dis ibu ed p o i . To explain wha he p oblem is, i is necessa y o men ion ha o al
p o i comes om bo h objec s o he company, and buying and selling second-hand ehicles
do no make use o banking inance, so i is e y di icul o de e mine which is he eal deb
a e in any o hem. Also, he banking inance deb a e is 0.9169 due o he banking loans
ep esen he 57% o he o al liabili ies.
As a cla i ica ion, i can be said ha 2019 annual accoun a e no p esen ed ye , so
upda ed da a a e no a ailable. Wha can be said is ha , in hese ci cums ances he company
has aken ICO loans ins ead o bank loans. This ac would en ail a highe long- e m deb a io.
68
Appendix II
39
O he ele an in o ma ion is he ne posi i e p o i , which amoun s o 79,146.66€ and
co e s a 6.94% o he o al ne amoun o u no e . In o ma ion b oken down by business a ea
is no a ailable.
7.2. Wa by Pa ke L d.
Wa by Pa ke L d. began as a s a -up company ounded by h ee business school
classma es, and has become a $1 billion company. I was ounded in 2010 a ound he goal o
allowing e e yone o be able o own ashionable sunglasses a an a o dable p ice. As a p i a e
limi ed company, accoun s a e no public.
Wa by Pa ke has unded i s company almos en i ely h ough en u e capi al. They
ha e passed h ough he A, B, C and D unding se ies, and as o Ma ch 2018, hey we e looking
in o Se ies E unding o a wo h o $75 million
69
. The i s deb inancing s age ook place on
Oc obe 2010, when he company was c ea ed and amoun ed o $500 housand dolla s.
The company elied on hyb id unding, wi h aspec s o adi ional deb inancing a
hei beginnings. A e his i s s age, he company comple ely elied on en u e capi al.
O e all, Wa by Pa ke has no ched mo e han $200 million in unding since i s beginning,
oday, i is alued a $1.2 billion
70
. Rowe P ice and Gene al Ca alys a e wo examples o
in es men managemen i ms dedica ed o unding echnological s a -ups, and ha e been
p esen in some o he unding s ages ha Wa by Pa ke has unde gone.
7.3. Main di e ences
The compa ison be ween hese wo companies en iches ou p emise o why small
companies migh p e e new ways o unding, as hey ha e p o en o ha e quicke and mo e
e icien esul s, which a e also accompanied by success ac o s p e iously men ioned.
69
Appendix I
70
J. DE LA MERCED, M., Wa by Pa ke , he Eyewea Selle , Raises $75 Million, New Yo k Times, upda ed o
Ma ch 27, 2018, e ie ed on Ma ch 2019, a ailable in
h ps://www.ny imes.com/2018/03/14/business/dealbook/wa by-pa ke - und aising.h ml
46
P és amos pa a Emp esas y Negocios Españoles, My ipleA, upda ed o Decembe , 2019,
e ie ed on May 28, 2020, a ailable in h ps://www.my iplea.com/ inanciacion-
emp esas/p es amos/
PROSSER, D., Eu ope’s Al e na i e Finance Sec o Accele a es, upda ed o Janua y 26,
2018, e ie ed on Ap il 27, 2020, a ailable in
h ps://www. o bes.com/si es/da idp osse /2018/01/26/eu opes-al e na i e- inance-sec o -
accele a es/#33d3 b183d96
ROBEHMED, S., Wha Is A S a up?, Fo bes, upda ed o Decembe 16, 203, e ie ed on
Ma ch, 2020, a ailable in h ps://www. o bes.com/si es/na alie obehmed/2013/12/16/wha -is-
a-s a up/#5d80bd9b4044
SHENGLIN, B., e . al., The Fu u e o Finance is Eme ging: New Hubs, New Landscapes;
Uni e si y o Camb idge, 2018, e ie ed on Ma ch 2019, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e-
inance/downloads/2018-cca -global- in ech-hub- epo -eng.pd
Small and medium-sized en e p ises: an o e iew, Eu os a , Eu opean Commission, upda ed
o 11 No embe 2019, e ie ed on 15 Ap il 2020, a ailable in
h ps://ec.eu opa.eu/eu os a /en/web/p oduc s-eu os a -news/-/EDN-20191125-1
S a up Company, Wikipedia, upda ed on May 31, 2020, e ie ed on May 15, 2020,
a ailable in
h ps://en.wikipedia.o g/wiki/S a up_company#/media/File:S a up_Financing_Cycle.png
S a is ics Compendium Eu opean Ea ly S age Ma ke S a is ics 2018, EBAN, upda ed o
2019, e ie ed on May 15, 2020, a ailable in
h p://eban.img.mus c1.ne /s a ic/90357/documen i/ConsoleDocumen s/S a is ics%202018%
20Compendium%20-%20FINAL.pd
TOCA, G., Las es a egias de inno ación de los g andes bancos españoles, Fo bes, upda ed o
Ap il 20, 2018, e ie ed on 23 May, 2020, a ailable in h ps:// o bes.es/emp esas/41970/las-
es a egias-de-inno acion-de-los-g andes-bancos-espanoles/
VIII In o me sob e la inanciación de la pyme en España, CESGAR Sociedades de Ga an ía
Recíp oca, 2019, e ie ed on 17 Ap il 2020, a ailable in h p://www.cesga .es/wp-
con en /uploads/2019/04/VIII-In o me- inanciación-de-la-pyme.-Resul ados-2018-1.pd
WARDROP, R., e . al., Mo ing Mains eam: The Eu opean Al e na i e Finance
Benchma king Repo , Uni e si y o Camb idge, Feb ua y 2015, e ie ed on Ma ch 2019,
a ailable in h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e-
inance/downloads/2015-uk-al e na i e- inance-benchma king- epo .pd
Wha is an SME?, Eu opean Commission, e ie ed on 15 Ap il 2020, a ailable in
h ps://ec.eu opa.eu/g ow h/smes/business- iendly-en i onmen /sme-de ini ion_es
Wha is he Di e ece Be ween a S a -up and a SME, Bajaj Finse , e ie ed on Ma ch,
2019, a ailable in h ps://www.bajaj inse .in/insigh s/wha -is-di e ence-be ween-a-s a -up-
and-an-sme

47
ZHANG, B., e . al., The 5 h UK Al e na i e Finance Indus y Repo , Uni e si y o
Camb idge, No embe 2018, e ie ed on Ma ch 2019, a ailable in
h ps://www.jbs.cam.ac.uk/ acul y- esea ch/cen es/al e na i e- inance/publica ions/5 h-uk-
al e na i e- inance-indus y- epo /#.X QC8S8 xQI
ZIEGLER, T. e . al., The 3 d Eu opean Al e na i e Finance Indus y Repo , Uni e si y o
Camb idge, 2018, e ie ed on Ma ch 2019, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e-
inance/downloads/2018-cca -exp-ho izons.pd
ZIEGLER, T., e . al., Shi ing Pa adigms: he 4 h Eu opean Al e na i e Finance
Benchma king epo , Uni e si y o Camb idge, 2019, e ie ed on Ap il 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ ileadmin/use _upload/ esea ch/cen es/al e na i e-
inance/downloads/2019-05-4 h-eu opean-al e na i e- inance-benchma king-indus y- epo -
shi ing-pa adigms.pd
ZIEGLER, T., e . al., The Global Al e na i e Finance Ma ke Benchma king Repo ,
Uni e si y o Camb idge, Ap il 2020, e ie ed on 15 May 2020, a ailable in
h ps://www.jbs.cam.ac.uk/ acul y- esea ch/cen es/al e na i e- inance/publica ions/ he-
global-al e na i e- inance-ma ke -benchma king- epo /
48
10. G aphs and ables
TABLES
Table 1: de ini ion c i e ia o SMEs de ined by Eu opean Commission
Table 2: main ways o al e na i e inancing in 2016 in e ms o ma ke sha e in Eu ope
Table 3: A e age in e es a e o loans (upda ed o 2020)
GRAPHS:
G aph 1: pe cen age o en e p ises in Spain by size
G aph 2: su ey o SMEs abou bank inancing issues om 2008 o 2011
G aph 3: ways o inancing used o Spanish SMEs in 2018 (pe cen age o he o al which
used a ype on inancing)
G aph 4: gene al aspec s o inancing SMEs om 2016 o 2018
G aph 5: Regional Online Al e na i e Finance Ma ke Volumes 2014-2017 (bn €)
G aph 6: To al Al e na i e Finance Volume in Asia-Paci ic 2015-2018 (bn USD)
G aph 7: Online Al e na i e Finance Volume by Coun y 2017 (€million; Exc. UK)
G aph 8: olumes o al e na i e inance ansac ions by Eu opean coun ies on 2014 (€
million)
G aph 9: Al e na i e inance ma ke alloca ion in Eu ope (2016-2017)
G aph 10: To al Al e na i e Finance Volume by Model in Spain 2016-2017 (in millions o
€)
G aph 11: S a -up Financing Cycle
G aph 12: Ea ly S age In es men Ma ke in Eu ope, 2018
G aph 13: Decisi e ac o s o s a an in es men
G aph 14: olume o ICO loans in Spain (in million €)
49
11. Appendix
Appendix I
50
Appendix II
51

52