Today Nesta and Cambridge University, in partnership with KPMG, launch our study of the growth and dynamics within the online alternative finance market in 2015.

The study shows how 2015 was yet another year of remarkable growth for the market - the UK Alternative Finance sector now does £3.2 billion worth of loans, investments and donations a year, up 84% compared to 2014. It has its first unicorn, with Funding Circle’s latest round of financing valuing it at over a billion dollars. And other countries look at the UK’s policy set-up with interest and sometimes envy.

When Nesta began working with the sector in 2010, it consisted of a few plucky startups. The industry, such as it was, could be gathered around a largish table. Discussions with policymakers and regulators had to begin with careful explanations of what crowdfunding and peer-to-peer finance actually meant.

How things have changed.

Now rarely a day goes by without a story about alternative finance in the UK. Turn on the TV or take the tube in London and you will see adverts for the many P2P lenders. Open a newspaper and you are likely to encounter a story about the most recent crowdfunded video game or trendy gadget. And as the market grows in size, participation goes up, with this year's study estimating that in 2015, more than 1 million people in the UK invested, donated or lent using P2P lending or crowdfunding platforms.

2015 was also the year where equity crowdfunding showed further signs of its popularity with start-ups and investors. In addition to growing to more than £245 million, equity crowdfunding also saw its first two exits and we estimate that equity crowdfunding now makes up around 16% of all seed and venture-stage equity investment in the UK.

As the sector grows, it is sure to face challenges. In the coming year, as equity crowdfunded businesses mature, investors will be on the lookout for evidence of actual rates of return. If the economy turns sour, backers will learn more about the quality of peer-to-peer loans. Bad news on either of these fronts will be a challenge for the industry.

As we show in the study, 25% of all loans in the £2.2 billion P2P market were funded by institutions in 2015. We are likely to see incumbents playing an increasing role: both mainstream financial institutions, who are seeking to learn from their new competitors, and institutional funders, who will continue to provide significant amounts of the funds available on a growing number of platforms.

If the industry can rise to these challenges, its growth seems set to continue. So far, the ability of alternative finance providers to harness the power of the crowd to connect savers, borrowers and businesses has been powerful. We look forward to seeing how the sector advances in the year to come.