Freetrade opts for debt raise with £30m loan

UK stock brokerage app Freetrade has raised £30m through a loan agreement in its latest funding round.

The raise comes six months after the company had a record-breaking crowdfund in November to bring its valuation to £650m.  

This saw its valuation more than double from its earlier posting in 2021, and the new loan agreement means it will not have to attach a new valuation to the company, 

All existing investors — Molten Ventures, Left Lane Capital and L Catterton – participated in the round, and were joined by new investors, the Phoenix and Capricorn Capital Group.

“This new capital further strengthens Freetrade’s balance sheet to continue improving our product and expanding in Europe, as we remain focused on our mission to get everyone investing,” Freetrade founder and CEO Adam Dodds said in an email to AltFi.

“Our institutional backers have given us a strong vote of confidence.”

The fundraising comes off the back of a strong year for the investment app, with registered users in the UK reaching more than 1.3m and revenue for 2021 increasing more than six times to £15.1m.

“We didn’t price the round on purpose. By doing a convertible loan note, you take that out of the equation. It’s choppy markets. To zero in on a valuation at this point is maybe not that helpful” Dodds told the Financial Times.

In a company blog post, Dodds explained that the raise strengthens the balance sheet and will allow it to develop its product and meet the needs of customers across the UK and Europe.

“We believe this is a prudent step forward in our mission to building a sustainable business,” he wrote.

The raise comes at a time when start-ups are expected to struggle in a difficult market.

Freetrade’s US rival Robinhood has seen shares drop 45 per cent in 2022, while Swedish ‘buy now, pay later’ giant Klarna could take a c.30 per cent cut from its $45bn valuation as it tries to raise $1bn, according to media reports.

“We are proud to continue to support Freetrade on their mission to democratise access for retail investors to capital markets in a responsible and trusted manner,” Left Lane Capital founder and managing partner Harley Miller said.