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Wednesday 20 May 2020

Crowd gathers again to cheer on Freetrade with another £7m

logoWhat I find interesting* about the latest £7.1m crowdfunding round raised by London-based ‘challenger broker’ Freetrade is that it came barely six months after a $15m Series A round, half of which was stumped up by UK-based pan-European VC, Draper Esprit (see Draper Esprit trades $7.5m for a slice of Freetrade). Until then, Freetrade had solely raised dosh through crowdfunding since its launch in 2015. (*That, and the fact that they got the round done and dusted in the middle of the COVID-19 pandemic!)

The new round launched on 14th May and hit £5m on the first day, including £1m pump-primed from existing backers, with a total of 8,559 people investing. This is nearly double the number of its prior crowdfunding round which raised £3.8m on a £43m pre-money valuation. I can’t find any information yet on Freetrade’s current valuation.

Freetrade’s USP is in the name – they don’t charge a fee for basic trades (executed at close of play) or for a bank account (held by Custodians), though ‘extra features’ such as FX and bank transfers attract a fee. Even ‘instant’ trades (executed immediately), for which they used to charge £1, are now ‘free’. This compares with trading fees of up to £11.95 with other brokers.

I assume Freetrade gets a cut from the brokers executing the trades. But will that be enough alone to make its ‘fee free’ business model work?

Posted by: Anthony Miller

Tags: funding   startup  

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