Freetrade raises £30 million to fund business expansion
Freetrade, which calls itself a challenger stockbroker, has raised £30 million in debt financing led by a clutch of existing investors.
The growth funding round was bankrolled by Molten Ventures, Left Lane Capital and L Catterton. They were joined by new investors including Phoenix, an investment manager with over $100 billion in assets, and Capricorn Capital Group, a private investment firm.
The capital injection comes as Freetrade’s growth continues to surge. The UK fintech counts roughly 1.3 million customers, and has exceeded £3.7 billion in year-to-date trading volumes. On top of that, Freetrade generated revenues of £15.1 million in 2021 while assets under administration (AUA) surpassed £1 billion.
The funding will be used by Freetrade for further growth and product development, including doubling down on expanding to new markets. The UK commission-free stock has recently secured a license from the Swedish financial regulator, a big step forward in its European expansion.
Freetrade’s app offers commission-free stock investment, and is targeted mainly at millennials. The company has rebuilt its platform infrastructure for investing to allow traders to place their instant orders without having to pay a commission fee. Before that, clients were allowed to invest in stocks and ETFs, but only if they accept to execute their trades at the end of business day, otherwise the broker charges £1 per trade.
Freetrade’s ads drew FCA’s attention
Rather than partnering with an established broker, Freetrade holds a ‘full scope firm’ license from the FCA.
In a blog post, Freetrade CEO Adam Dodds, said: “We raised this money through a convertible loan note. We believe this is a prudent step forward in our mission to building a sustainable business. The money strengthens our balance sheet and provides us with the firepower to continue to develop our product and meet the needs of our customers in the UK and Europe.”
The stock broking upstart, which was Founded three years ago by CEO Adam Dodds and Viktor Nebehaj, says its transparent and low-cost fee structure can entice more consumers into investing even when they have smaller sums of money. This, however, prompted the Financial Conduct Authority to sound the alarm on what it sees as misleading advertising to attract unprofessional investors.
The UK financial regulator ordered the investment platform to remove all paid-for social media influencer posts, citing concerns it could lure in-debt consumers hoping to cash in on the low-cost investing boom. The City watchdog said FreeTrade should remove all social media campaigns to stop young people being tempted into risky investments.
