Freetrade mulls sale as investors grow skittish
THE stock-trading app Freetrade is preparing to tap advisors for a possible sale as financial technology startups come under pressure.
Freetrade, which was last year valued at £650m by retail investors in a crowdfunding campaign, is planning to hire Bank of America to consider its options.
City sources said Freetrade was mulling a sale or merger with rival financial technology companies. It could also tap the market to raise more investment from venture capital funds.
Founded in London by chief executive Adam Dodds in 2016, Freetrade allows customers to buy British, American and European stocks and funds without trading fees. It has raised more than £110m in venture capital funding and grew rapidly during the pandemic as thousands of people began trading the stock market while stuck at home.
It has raised tens of millions of pounds from ordinary investors through online crowdfunding rounds. But last year it failed to secure additional venture capital investment at a valuation of £700m. It came as the retail trading boom began to cool, hitting investment platforms across the City of London.
Freetrade, which has over £1.4bn in assets under management, raised £30m in May through convertible loans issued by early investors including London-listed Molten Ventures and investment manager Phoenix. It raised a further £2m from crowdfunding investors in September.
The company has since cut its headcount by around 15pc, which Mr Dodds said meant it would reduce its cash burn to around £1m per month “down considerably from the start of the year”.
Since then, valuations at technology companies have crashed as investors grow skittish.