The establishment of a new economic model focused on cooperation rather than competition is aided by revolutionary improvements in information technology and the growing importance of social networks. The massive rise of the so-called sharing economy, which today affects an increasing number of sectors and activities – including the financial system and finance in general – is a sign of these developments. Since 2010, angel investors have poured more than $23 billion into firms that operate on a share-based model, making the sharing economy one of the fastest-growing business trends in history. It’s hard to estimate the scale of the sharing economy because many of these enterprises are private.

However, there are various indicators that it will have a significant influence on our society.

  • Airbnb ($31 million) and Uber ($72 billion) have a collective market capitalization of $103 billion, making them the world’s 38th wealthiest country.
  • The sharing economy was utilised by 44.8 million adults in the United States in 2016, and it is predicted to rise to 86.5 million by 2021.
  • According to McKinsey, 162 million individuals, or 20-30% of the workforce, are suppliers on sharing platforms in the United States and Europe alone.

The sharing economy may be seen in finance equity funding as well, in the form of so-called collaborative finance. Collaborative finance refers to money that is “produced” by individuals rather than via financial institutions. Participants in collaborative finance believe that peer-to-peer financial interactions will result in more beneficial outcomes and that money will once again become “human.”

The focus of this article is to first explain the ideas of sharing economy and collaborative finance, and then to characterise the many kinds of collaborative finance that have emerged.

What Exactly Is the Sharing Economy?

Attempting to describe the sharing economy would be a disservice to the phrase. The sharing economy is a continually changing economic philosophy. It’s the use of technology to ease the exchange of goods and services among two or more parties in the most basic sense. It’s based on the idea that mutual parties might benefit from a talent or something that is underutilised. A shared marketplace, collaborative platform, or peer-to-peer program facilitates this value exchange. Many rural villages flourished on the same principle via bartering, so the sharing model isn’t new. Managing share-based transactions, on the other hand, has never been easier because of the internet’s accessibility and mobile technologies.

While this phrase is most generally used to refer to the sharing economy, it really refers to a broader economic system that includes:

1. Collaborative Economy/Collaborative Consumption

2. Freelancing/Gig Economy

3. Peer-to-Peer Economy

4. Crowdfunding/Crowdsourcing

5. Coworking/Cobranding

There are various reasons that are influencing the growth of the sharing economy idea. The most crucial point is that individuals currently have a tremendous ability to communicate and exchange ideas, as well as things. It’s feasible because of the growth of social media, which is a collection of Internet-based programs that link people all over the world through mobile and web-based technology. Mobile gadgets (such as cellphones, laptop computers, tablets, pagers, and so on) make it very easy to not only monitor and find people in time and place but also to track and locate items (“track and trace systems”). As a result, the sharing economy would almost certainly not exist without the emergence of a “digital economy” based on digital technology. In today’s networked world, communication infrastructures enable new levels of information searching, communication, interaction, and cooperation among communities on a transnational and global scale. An outbreak of the global financial crisis and its consequences are also major catalysts for the growth of collaborative consumption. The community began to see that by working together to organise and act, it was possible to more successfully attain purposeful goals and mitigate the consequences of financial and economic crises. The global financial crisis cast doubt on the economy’s present structures and sparked a crisis of faith in corporations, financial institutions, venture capitalists and governments.

There are various more factors that make the sharing economy appealing to consumers, including:

  • Consumers are more likely to avoid overspending and to utilise resources more efficiently as a result of sustainable development. This causes manufacturers to adjust, as they are more likely to find customer desires before manufacturing; they do not overproduce, leaving resources for future generations.
  • Social stability, since the sharing economy is founded on collaboration, people of the community place less value on ownership; this can help to reduce social division and bring society closer together.
  • Fulfilling new needs as the sharing economy can meet new consumer demands that the old economic system cannot. 

In actuality, collaborative consumption entails a variety of behaviours such as lending, renting, trading, bartering, gifting, and swapping various goods.

The sharing economy is increasingly manifesting itself in finance through what is known as collaborative finance.

Collaborative finance and its variants

The financial industry has seen rapid and profound developments in the previous two decades. Technological advancements transformed the company’s operations, transforming it into the most contemporary enterprise. Nevertheless, the global financial crisis eroded public faith in the financial system, particularly in the banking sector, and individuals began to look for alternatives to “conventional” financial institutions for venture capital and finance. One of the main catalysts for collaborative finance (also known as “peer-to-peer finance” or “person-to-person financing”) was the global financial crisis. In general, this word refers to the financial transactions that take place between relevant people (who may or may not be well-known to oneself) without the involvement of financial institutions. 

What Is the Sharing Economy’s Impact?

Traditional business sectors have been disrupted by the sharing economy in the past. Share-based enterprises may run lean since they don’t have any expenses or inventory. These brands may pass on value to their consumers and supply chain partners as a result of their enhanced efficiency. The sharing economy is affecting conventional businesses, and many old companies may fail if they really do not adapt to the new reality.


Uber’s rise in the transportation business is one of the greatest instances of the sharing economy’s impact on a conventional industry. Uber and other ride-sharing services provide a cost-effective, safe, and efficient alternative to traditional modes of transportation including public transportation and taxi cabs. Uber serves consumers’ transportation needs while delivering an undoubtedly better experience than traditional modes of transportation by leveraging an efficient smartphone application and a network of verified drivers. Uber drivers outnumber yellow taxis by nearly 4.5 times in New York City alone. 

Top Transportation Sharing Economy Brands include:

  • Uber: $72 Billion
  • Lyft: $11 Billion
  • Didi: $50 Billion

Goods for Consumers

According to PWC study, 86 per cent of individuals in the United States who are familiar with the sharing economy believe it makes living more inexpensive, and 83 per cent believe it is more efficient and convenient than traditional ways. Accessibility, simplicity, and effectiveness are also three of the main considerations while acquiring consumer items. As a result, it’s no surprise that consumer products are dominated by share-based companies.

eBay is credited as one of the first peer-to-peer marketplaces. Their revolutionary technology lets customers purchase and sell old and new products straight through their interface, with the goods being delivered to their doorstep. Consumers may choose from a wide range of items at various price points, in varied circumstances, and with varying assurances. This gives customers greater leverage and gives them a more economical, convenient, and efficient method to buy items.

Top Consumer Goods Sharing Economy Brands with major equity funding include:

  • eBay: $36.8 Billion
  • Rent the Runway: $800 Million
  • Etsy: $5.2 Billion

Services for Business and Individuals

Personal and professional services are the finest examples of the sharing economy’s benefits. Work that needs unique knowledge, skills, experience, certificates, or training, such as copywriting, accounting, or plumbing, is classified as professional or personal services. This is also known as freelancing, gigs, and other current phrases corresponding to short-term labour in the sharing economy. Fiverr, Upwork, and TaskRabbit are powerhouses that provide value by offering a fast, pleasant, and secure platform for consumers and organisations to employ workers. Freelancers can supplement their income by renting out their professional skills and experience, similar to how homeowners rent out their homes or automobile owners share rides.

Top Professional and Personal Services Brands in the Sharing Economy:

  • Fiverr: $351 Million
  • TaskRabbit: $50 Million +
  • Upwork: $168.8 Million +


By 2020, the healthcare business is estimated to produce $8.7 trillion in yearly sales. That may explain why venture capital funding for digital health firms jumped 10.2 per cent in the first quarter of 2018 compared to the same period last year. Despite the fact that the sharing economy has yet to truly take root in the healthcare business, many experts believe it will be the next frontier for collaborative consumption. Traditional healthcare systems’ constraints, such as costs and resources, have been reduced in other industries using share-based solutions. The sharing economy is set to transform the healthcare business, from telemedicine to group consultations.

Medical equipment, for example, is anticipated to be underutilised 58 per cent of the time, resulting in storage and maintenance costs. As a result, share-based firms like Cohealo are building technology that allows hospitals to share medical devices with other healthcare institutions, enabling hospitals to save money and boost equipment value.

Top Healthcare Sharing Economy Brands include:

  • American Well: $441.5 Million
  • Cohealo: $9 Million +
  • Doctor On Demand: $160 Million

What Does the Future Hold for the Sharing Economy?

Technology has aided the advancement of the sharing economy to where it is now, and this tendency must only accelerate as we become more digitally connected. While we’ve seen how collaborative consumption can be dominant in areas like transport, consumer goods, and services, the sharing economy will eventually affect many more conventional sectors.

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