On the basis of critical analysis of scientific approaches, the author defines the notion of the global alternative finance market as a system of capital supply and demand relations, which operates on the basis of online platforms for financial intermediation and uses the collective decision-making process to finance projects. In the research, there were revealed the background, genesis and institutional foundations of alternative finance market as well as local specifics of its regulation. The global alternative finance market is actively developing, creating the ground for adoption of specific legislation that, on the one hand, aims to protect non- professional investors from fraud risks and, on the other, remove barriers to the development of national crowdfunding markets. However, it is appropriate to mention that it is in a poorly controlled global environment that we are witnessing a period of rapid development of alternative financing. Depending on the area of activity of small and medium businesses (SMEs), a matrix of the most used sources of alternative finance by region (Asia, America, Europe) has been formed, which showed that the greatest opportunities for alternative finance exist for SMEs working in the technological sphere, in the retail and wholesale trade, as well as in construction. The author proposes a criterion-based approach to assessing the maturity phase of the local alternative finance market based on integrated indicator – Alternative Finance Development Index (AFDI). It is calculated for each country on an aggregate basis which includes its capacity and growth dynamics, the available range of alternative finance platforms, the existence of specific legislation and special forms of alternative finance for entrepreneurs. In the research, it is proposed a step-by-step algorithm for estimating the probability of information cascades in the crowdfunding market based on mathematical modeling of the decision-making process by platform investors. By testing the algorithm, it is revealed that in an environment where information is flawed, every investor seeks to imitate the behavior of other investors without considering their own expertise. This leads to poor quality of information, as well as a high risk of financing of loss-making projects or abandoning of profitable projects. It is justified that the risk of the information cascade is not directly related to the crowdfunding method and caused by the same rate of return for all investors. Changing the rate based on the project quality signals received will provide a fairer investor pay system and less risk of an information cascade. It is proved that in Ukraine there is a problem with the availability and high cost of financial resources for small and medium-sized businesses, so the development of alternative finance can become an important component of its solution.
