Freetrade Faces Backlash Over £160 Million Sale To IG Group
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Freetrade is facing criticism from its early investors following its £160 million sale to IG Group, a deal valued over 25% lower than its last fundraising estimate. A Freetrade representative noted that the sale still resulted in early investors making 15 times the original investments.
Investors from the Series A round earned an average return of 2.7 times their investment, while Series B investors saw an average return of 1.7 times.
Freetrade Faces Backlash From Early Investors Following Acquisition By IG Group
Reports revealed that Freetrade has raised $160 million since it started in 2016. Although the company tried to raise funds at a £700 million valuation in 2022, those negotiations didn’t succeed.
IG Group, which is listed in London, acquired full ownership of the UK-based trading platform to broaden its range of products in the country. Despite this, Freetrade will continue to operate separately with its current management team in place.
An early investor expressed frustration, saying that they felt completely robbed by Freetrade and would lose 87% of their investment due to the deal. They mentioned that crowdfunders had supported the company’s growth, but now Freetrade had abandoned them once they no longer needed their backing.
The investor said if the company was having trouble, they would have understood taking a low offer to help shareholders, but Freetrade was making money at that time.
Freetrade’s Profitability And Investor Backlash Amid Acquisition Deal
Freetrade made money in the first half of 2024, with £12.3 million in gross profit. It also made £91,000 in adjusted operating profit, a big comeback from a £5.6 million loss the year before.
The investor added, “IG got a good deal, but it hurt small investors.” The costs of the sale will be taken from the money for Freetrade shareholders. The deal still needs approval to finish.
Freetrade was started in 2016 by Adam Dodds and Davide Fioranelli. It helps people trade shares for free. The company launched its iOS app in 2018 and the Android app in 2019. By October 2021, Freetrade had over one million users. In March 2021, it reported trading volumes over £1 billion.
By November 2021, Freetrade had more than £1 billion in assets. Molten Ventures helped the company with $15 million in 2019. André Mohamed, one of the co-founders and the CTO, left in 2018 and went to work at Revolut in 2019.
