Freetrade slashes valuation by 65 per cent to £225m

DIY investing app Freetrade has slashed its pre-money valuation by 65 per cent ahead of a crowdfunding round, blaming current market conditions.

During the pandemic, Freetrade’s valuation rose to £650million as investors flocked to the app, but the company announced it has since fallen to £225million.

Chief executive Adam Dodds blamed a ‘different market environment’ for the steep fall in valuation.

‘Since we were last in the market a lot has changed. We’ve seen the longest bull market in history come to an end and valuations of public companies fall.

‘Freetrade is no different. We’re now operating in a different market environment where we need to prioritise profitability. 

‘We’ve arrived at a valuation for this round in line with the declines in valuation we’ve seen with public market peers.’

Freetrade was among the high growth tech firms which faced a reckoning in 2022 as the tech bubble burst. 

Its £700million Series C round, which had been agreed in December 2021, was pulled within a month.

Last summer, it raised £30million from existing and new institutional investors, with crowdfunding on top of that. It is now returning to the crowd, 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 narrowing from £8.9million in the first quarter of 2022 to £3.3million in the first three months of this year, on revenues of £4.7million.

Dodds says Freetrade is set to generate £22.5million in revenue this year and finally reach profitability.

‘We’ve reached over 700,000 funded customers who have trusted us with an all-time high of £1.4billion in assets and we’re on track to generate £22.5million in revenue for 2023.

‘The world has changed from the heady days of 2021, but as a business we’re stronger than we’ve ever been.’

Over the past year, Freetrade has hiked its fees twice. Last summer, Freetrade introduced three subscription plans – Basic, Standard and Plus – which saw Standard customers face a 66 per cent hike in fees.

A fresh round of price rises landed in May. The standard subscription, which includes an Isa, will now go from £4.99 to £5.99 per month, while the Plus plan, previously £9.99, will cost £11.99 per month.