Freetrade Failed to Secure Higher Valuation as Investors Back Out

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Freetrade Failed to Secure Higher Valuation as Investors Back Out

<p>Freetrade, a UK-based stock trading platform, failed to attract new investors at a higher valuation earlier this year as the tech stocks plunged, The Financial Times reported on Tuesday.</p><p>The trading startup signed term sheets with new backers for a <a href="https://www.financemagnates.com/terms/f/funding-round/" target="_blank" id="d08fbe2e-fff7-405c-9466-eaaa94820467_1" class="terms__main-term">funding round</a> at a £700 million valuation, but the deal was scrapped last January.</p><p>"During the advanced stages of this deal, the macro-environment began to reverse abruptly, and venture markets seized up. The deal did not complete," Freetrade's CEO, Adam Dodds stated in a letter sent to the company's shareholders who participated in its <a href="https://www.financemagnates.com/terms/c/crowdfunding/" target="_blank" id="123c62c4-dab0-4489-b3e1-9961cb08abb5_1" class="terms__secondary-term">crowdfunding</a> and was seen by the publication.</p><p>However, the company has yet to make any public declaration of the failed funding round.</p><p>Fair Valuation?</p><p>The failure to receive a new valuation pushed the startup to secure £30 million in a convertible loan from existing investors last May. Then, it was backed by Left Lane and Molten, two of its largest backers, receiving £5 million from each.</p><p>The startup was valued with a <a href="https://www.financemagnates.com/forex/brokers/freetrade-looks-forward-to-double-its-valuation-with-a-new-fundraising/" target="_blank">pre-money tag of £650 million</a> in a crowdfunding round that closed last November. </p><p>"The valuation represented a c. 30x multiple on our annualized revenue run-rate, broadly in line with public market valuations at the time for consumer fintech businesses on a similar growth path," the CEO said.</p><p>The trading platform <a href="https://www.financemagnates.com/forex/brokers/freetrade-ends-fy21-with-a-647-revenue-jump-clients-crossed-1-million/" target="_blank">generated revenue of £12.7 million</a> in the financial year 2021, which ended on September 30. The figure was 647 percent higher than the revenue of £1.7 million it brought in the previous year. However, it suffered a pre-tax loss of £18.2 million.</p><p>Freetrade is based in the United Kingdom and is now expanding its footprint within the European Economic Area. It has already entered multiple European countries with plans for further expansion.</p><p>Earlier this year, the company was forced to <a href="https://www.financemagnates.com/forex/brokers/fca-orders-freetrade-to-pull-down-misleading-social-media-promotions/" target="_blank">take down its social media campaign</a> by an FCA order, which labeled the posts as 'misleading'.</p>

This article was written by Arnab Shome at www.financemagnates.com.

Source: Freetrade Failed to Secure Higher Valuation as Investors Back Out