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.
Freetrade boss Adam Dodds has said the fall in the company’s valuation is due to a ‘different’ market environment
‘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.
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