Freetrade, a UK-based stock trading platform, failed to attract new investors at a higher valuation earlier this year as the tech stocks plunged, The Financial Times reported on Tuesday.
The trading startup signed term sheets with new backers for a funding round at a £700 million valuation, but the deal was scrapped last January.
“During the advanced stages of this deal, the macro-environment began to reverse abruptly, and venture markets seized up. The deal did not complete,” Freetrade’s CEO, Adam Dodds stated in a letter sent to the company’s shareholders who participated in its crowdfunding and was seen by the publication.
However, the company has yet to make any public declaration of the failed funding round.
Fair Valuation?
The failure to receive a new valuation pushed the startup to secure £30 million in a convertible loan from existing investors last May. Then, it was backed by Left Lane and Molten, two of its largest backers, receiving £5 million from each.
The startup was valued with a pre-money tag of £650 million in a crowdfunding round that closed last November.
“The valuation represented a c. 30x multiple on our annualized revenue run-rate, broadly in line with public market valuations at the time for consumer fintech businesses on a similar growth path,” the CEO said.
The trading platform generated revenue of £12.7 million in the financial year 2021, which ended on September 30. The figure was 647 percent higher than the revenue of £1.7 million it brought in the previous year. However, it suffered a pre-tax loss of £18.2 million.
Freetrade is based in the United Kingdom and is now expanding its footprint within the European Economic Area. It has already entered multiple European countries with plans for further expansion.
Earlier this year, the company was forced to take down its social media campaign by an FCA order, which labeled the posts as 'misleading'.
