Freetrade slashes valuation by 65 per cent to £225m
Freetrade cuts valuation 65% to £225m in latest crowdfunding round due to ‘different market environment’
- Freetrade has reduced its value from £650 million to £225 million in two years
- CEO Adam Dodds says world has changed since the ‘heady days of 2021’
- Freetrade’s losses fell to £3.3 million in the first three months of 2023
Do-it-yourself investment app Freetrade has slashed its pre-money valuation by 65 percent ahead of a crowdfunding round, blaming current market conditions.
During the pandemic, Freetrade’s valuation soared to £650m as investors flocked to the app, but the company announced it has since fallen to £225m.
Chief executive Adam Dodds blamed a “different market environment” for the sharp drop in valuation.
Freetrade boss Adam Dodds has said the fall in the company’s valuation is due to a ‘different’ market environment
“Since we were last on the market, a lot has changed. We have seen the longest bull market in history come to an end and valuations of public companies have fallen.
Free trade is no different. We now operate in a different market environment where we must prioritize profitability.
“We’ve come to a valuation for this round that’s in line with the declines in value we’ve seen in peers in the public market.”
Freetrade was one of the high-growth technology companies that had to come to an end in 2022 when the tech bubble burst.
The £700 million Series C round, agreed in December 2021, was withdrawn within a month.
Last summer it raised £30 million from existing and new institutional investors, plus crowdfunding. It is now returning to the public, with an offer of £2.60 per share later this month.
Since the start of the year, Freetrade’s fortunes have recovered somewhat, with losses ranging from £8.9m in the first quarter of 2022 to £3.3m in the first three months of this year, on revenues of £4, 7 million.
Dodds says Freetrade will generate £22.5 million in revenue this year and eventually become profitable.
“We have reached over 700,000 funded clients who have entrusted us with a record £1.4 billion in assets and we are on track to generate £22.5 million in revenue by 2023.
“The world has changed since the heady days of 2021, but as a company we are stronger than ever.”
In the past year, Freetrade has increased its rates twice. Last summer, Freetrade introduced three plans — Basic, Standard, and Plus — which saw Standard customers experience a 66 percent rate increase.
A new round of price increases followed in May. The Standard plan, which includes an Isa, now goes from £4.99 to £5.99 per month, while the Plus plan, previously £9.99, costs £11.99 per month.