Jump to content

Freetrade

Add links
From Wikipedia, the free encyclopedia
(Redirected from Freetrade (company))
Not to be confused with free trade.

Freetrade Ltd
Company typePrivate
IndustryFinTech
Founded2016; 9 years ago (2016)
Founders
  • Adam Dodds
  • Davide Fioranelli
HeadquartersLondon, United Kingdom
Key people
  • Viktor Nebehaj (CEO)
ProductsShare dealing
Decrease −13.9 mln (2023)[1]
Total assets£2.5 bln (2024 YE)[2]
Number of employees
184[3] (2022[3])
Websitefreetrade.io Edit this at Wikidata

Freetrade is a UK-based fintech company founded in 2016 by Adam Dodds and Davide Fioranelli. It provides a mobile trading platform targeting retail investors in the UK, allowing users to trade equities and ETFs through iOS and Android applications.

Initially relying on crowdfunding, Freetrade grew during the COVID-19 pandemic and raised venture capital funding including a $69 million Series B round in 2021. Despite growth, it faced persistent financial losses and declining valuations from 2022 onwards. By the end of 2024, Freetrade onboarded 720k active customers with assets under management of £2.5 billion.[2]

Freetrade experienced regulatory scrutiny related to its advertising practices and criticism regarding hidden fees in its pricing model. In January 2025, Freetrade was acquired by IG Group for £160 million, prompting criticism from retail investors due to the significantly reduced valuation.[4][5][6]

History

[edit]

Freetrade was founded in 2016 by Adam Dodds and Davide Fioranelli.[7][8] In October 2017, the company obtained a license from the Financial Conduct Authority.[9] It launched an iOS app in October 2018, followed by an Android version in April 2019.[10][11] A Forbes review described Freetrade's app as "a challenger stock trading app built for the Instagram age," praising its accessibility while criticizing its lack of financial charting tools and the initial absence of US-listed securities.[12]

In 2019, venture capital firm Molten Ventures participated in Freetrade's $15 million Series A funding round.[13][14][15]

In 2018, CTO and co-founder André Mohamed departed, while Viktor Nebehaj, an early crowdfunding investor, joined as chief marketing officer.[16] Ian Fuller joined as VP of Engineering from Snapchat in 2018 and left in 2021.[17] In July 2023, Freetrade EU head Jordan Sinclair was hired as UK head by Robinhood Markets, Freetrade's principal rival.[18][19][20]

Freetrade experienced significant growth during the COVID-19 pandemic,[19][21] further benefiting from the GameStop short squeeze in early 2021.[22][23]

Freetrade has relied heavily on crowdfunding: between 2017 and 2019, it raised over £10 million from individual investors.[9] A sixth crowdfunding campaign in May 2020 raised an additional £7 million.[24][21]

The company's $69 million Series B funding round was announced in March 2021, led by Left Lane Capital, with participation from L Catterton and Molten Ventures.[25][26] Despite reaching quarterly trading volumes exceeding £1 billion in May 2021,[25] 1 million registered users by October,[27] and £1 billion in assets under administration by November,[28] the company reported a net loss of £17.1 million for the year.[3]

In 2022, Freetrade struggled to attract new investors at a higher valuation.[29] As a result, it raised funds through a crowdfunded convertible loan note.[30] After securing £30 million via Crowdcube,[31] the company's valuation fell 65% to £225 million.[6][22] The year ended with a net loss of £28.8 million, marking one of the company's worst financial performances.[32]

Initially, Freetrade had plans to expand across Europe, beginning with Sweden, Ireland, and the Netherlands.[33][34] A pan-European launch was scheduled for early 2023,[3] but by 2024, the company withdrew from the Swedish market, and the planned launches in Ireland and the Netherlands never materialized.[35]

In May 2024, CEO and co-founder Adam Dodds announced his resignation, with COO Viktor Nebehaj succeeding him.[36] At the same time, Freetrade reported its first-ever profit, posting a gross profit of £12.3 million and an adjusted operating profit of £91,000[4] In October 2024, the company acquired the UK client base and assets of Australia-based online broker Stake for an undisclosed sum.[37] At the end of 2024, Freetrade reported a 32% year-over-year revenue increase, reaching £27.5 million.[2] By the end of 2024, the company had onboarded 720,000 customers with assets under administration of £2.5 billion.[2]

In January 2025, Freetrade was acquired by IG Group for £160 million in a cash deal, representing a 29% discount from its previous fundraising valuation (£225 million). This sale price contrasted with the company's peak valuation of around £650 million in late 2021.[4] Regulatory approvals are expected by mid-2025.[2] The company said that it would continue to operate as a commercially standalone entity under its own brand.[38] Six months prior to the acquisition, in mid-2024, Freetrade's CEO Viktor Nebehaj stated to Sky News: "Right now, Freetrade is in its strongest financial position in its history," highlighting optimism about the company's future prospects. However, Sky News later revealed that as early as 2022, Freetrade had engaged in preliminary discussions with investment bank JP Morgan about a potential sale, though these discussions ultimately did not result in an agreement.[39] Early investors criticized the deal, accusing the management of ignoring smaller investors who had significantly supported the company's growth through crowdfunding. Viktor Nebehaj, Freetrade's CEO, acknowledged that Series B investors incurred losses from the sale[5][39] while, as one user noted, he "coincidentally became a millionaire in the process."[40]

Operations

[edit]

Freetrade offers a trading app available on Android and iOS, open to users in the United Kingdom. The platform allows users to trade equities and ETFs listed in the UK and the United States. For US securities, users can hold and trade fractional shares. Portfolios can be held in tax-free ISA or SIPP (personal pension) accounts for a fixed monthly fee. In October 2020, Freetrade introduced its premium service, Freetrade Plus, which expanded the list of available securities and order types.[41] The platform's backend operates on a serverless computing model hosted by Google Cloud Platform.[11]

Freetrade primarily generates revenue through monthly subscription fees for Individual Savings Accounts (ISA), Self-Invested Personal Pension plans (SIPP), and its premium subscription service, Freetrade Plus. Although general investment accounts have no direct trading commissions, users are charged currency exchange spreads when trading non-UK securities, such as US stocks. This subscription-based model, combined with indirect costs like foreign exchange fees, has prompted criticism that the company's advertising as a "zero-fee" platform may not accurately reflect users' actual investment costs.[26]

Controversy

[edit]

In January 2020, Freetrade faced allegations of fostering a toxic workplace culture following an investigation by City A.M. into employee complaints. Reports indicated that between 2018 and 2019, the company had a 50% staff turnover rate, with the entire design team resigning at one point.[42][43] Former employees described being pressured into excessive workloads and cited dysfunctional management, abusive communication, and a lack of recognition for good performance.[44]

Freetrade was warned by the UK Financial Conduct Authority (FCA) regarding misleading financial promotions. In March 2020, the regulator identified non-compliant promotional materials and demanded a review of the company's advertising practices. The FCA found that Freetrade's advertisements failed to provide "a fair and prominent indication of any relevant risks when referencing potential benefits." Despite acknowledging the issue and implementing corrective measures, the company received a supervisory notice in March 2021, requiring the removal of all paid sponsored influencer advertisements on social media platforms. The FCA emphasized that the ads were misleading, as they implied guaranteed positive returns on investments, posing a risk to financially vulnerable individuals. The company failed to resolve the issue and received a second supervisory notice in January 2022.[45][46] In February 2022, the FCA took further action, ordering Freetrade to remove all sponsored influencer posts within 24 hours following another misleading promotion involving a social media influencer who claimed to have cleared £14,000 of debt in 18 weeks without clearly disclosing investment risks. The FCA expressed concern about the vulnerability of the influencer's 64,000 followers, highlighting that consumers already in debt could be misled into believing they could reduce their debts through similar investment actions. This was the third warning from the FCA regarding the company's advertising practices.[47]

In 2023, Freetrade faced criticism after it emerged that some of its customers could face unexpected tax liabilities due to the platform allowing the purchase of fractional shares in popular US companies within Individual Savings Accounts (ISAs). According to UK tax regulations, fractional shares are not eligible to be held within ISAs, potentially leaving investors exposed to tax on gains that they assumed were sheltered within tax-free accounts.[48]

Awards

[edit]
  • British Bank Awards 2021 – Best Online Trading Platform[49]
  • Good Money Guide 2021 – Best Commission-Free Stockbroker[50]
  • British Bank Awards 2020 – Best Online Trading Platform[51]
  • British Bank Awards 2019 – Best Share Trading Platform[52]
  • Good Money Guide 2019 – People's Choice[53]

References

[edit]
  1. ^ Segal, Gerald (14 October 2024). "Exclusive: Freetrade loss totaled £13.9M in 2023". FX News Group. Retrieved 25 February 2025.
  2. ^ a b c d e Shome, Arnab (16 January 2025). "Breaking: IG Acquires Freetrade for £160 Million". Finance Magnates. Retrieved 24 February 2025.
  3. ^ a b c d Segal, Gerald (7 July 2023). "Freetrade posts £15.6M Revenue, £39.8M Net Loss in FY 2022". FX News Group. Retrieved 25 February 2025.
  4. ^ a b c Shome, Arnab (17 January 2025). "IG Deal Cuts Freetrade's Valuation By Over a Quarter: Shareholders Backlash". Financial Magnates. Retrieved 24 February 2025.
  5. ^ a b Shome, Arnab (17 January 2025). "IG Deal Cuts Freetrade's Valuation By Over a Quarter: Shareholders Backlash". Finance Magnates. Retrieved 24 February 2025.
  6. ^ a b Reynolds, John (16 January 2025). "Early crowdfunding investors bag returns but late investors lose out as Freetrade snapped up for £160M". Tech EU. Retrieved 24 February 2025.
  7. ^ "FREETRADE LIMITED - Filing history (free information from Companies House)". find-and-update.company-information.service.gov.uk. Retrieved 22 June 2021.
  8. ^ Segal, Gerald (2 January 2025). "Exclusive: Freetrade co-founder Davide Fioranelli returns as a Non-Exec Director". FX News Group. Retrieved 25 February 2025.
  9. ^ a b Kimberley, David (3 October 2019). "Freetrade Co-Founder: We're Set For European Expansion". Financial Magnates. Retrieved 24 February 2025.
  10. ^ Steve O'Hear (2 October 2018). "Freetrade launches 'zero-fee' investment app". TechCrunch. Retrieved 15 October 2020.
  11. ^ a b Caroline Donnelly (21 April 2020). "UK challenger stockbroker Freetrade backs Google Cloud to make investing more inclusive". Computer Weekly. Retrieved 15 October 2020.
  12. ^ Oliver Smith (3 October 2018). "Freetrade Review: A Challenger Stock Trading App Built For The Instagram Age". Forbes. Retrieved 15 October 2020.
  13. ^ Emily Nicolle (25 June 2019). "Freetrade to close £7m in second crowdfunding round". City A.M. Retrieved 15 October 2020.
  14. ^ Emily Nicolle (31 October 2019). "City startup Freetrade raises $15m from Revolut backer Draper Esprit". City A.M. Retrieved 15 October 2020.
  15. ^ Steve O'Hear (31 October 2019). "Freetrade, the UK challenger stockbroker, completes $15M Series A". TechCrunch. Retrieved 15 October 2020.
  16. ^ O'Hear, Steve (10 January 2019). "Revolut hires Freetrade co-founder and former CTO as head of Wealth & Trading Product". TechCrunch. Retrieved 15 March 2023.
  17. ^ "Freetrade's long-serving chief technology officer to depart". Archived from the original on 30 March 2021. Retrieved 21 February 2025.
  18. ^ Segal, Gerald (23 July 2023). "Robinhood hires Freetrade EU head Jordan Sinclair as new UK CEO". FX News Group. Retrieved 25 February 2025.
  19. ^ a b Browne, Ryan (16 January 2025). "UK Robinhood rival Freetrade snapped up by trading firm at 29% valuation discount". NBC NY. Retrieved 24 February 2025.
  20. ^ Segal, Gerald (1 October 2024). "Freetrade buys Stake UK clients and assets". FX News Group. Retrieved 25 February 2025.
  21. ^ a b Tucker, Charlotte (22 May 2020). "London-based Freetrade closes €7.8 million crowdfunding for its investing app". EU Start-ups. Retrieved 24 February 2025.
  22. ^ a b Browne, Ryan (16 January 2025). "UK Robinhood rival Freetrade snapped up by trading firm at 29% valuation discount". CNBC. Retrieved 24 February 2025.
  23. ^ Grant, Kirsty (28 January 2021). "GameStop: What is it and why is it trending?". BBC. Retrieved 24 February 2025.
  24. ^ Skinner, Celeste (15 May 2020). "Freetrade Exceeds £1m CrowdFunding Goal, Aims for £7m". Financial Magnates. Retrieved 24 February 2025.
  25. ^ a b "Investment platform Freetrade raises £50m as homebound customers fuel revenue surge". Sky News. Retrieved 23 March 2021.
  26. ^ a b "Stock trading app Freetrade raises $69 million". TechCrunch. Retrieved 22 June 2021.
  27. ^ "Freetrade sails past one million customers". AltFi. Retrieved 14 October 2021.
  28. ^ "Freetrade hits £1bn in Assets under Administration". freetrade.io. Retrieved 21 November 2021.
  29. ^ "Fintech Freetrade struggled to find new backers at hoped-for valuation". FinancialTimes. Retrieved 14 March 2022.
  30. ^ "Freetrade raises £30 million through convertible loan note". 23 May 2022. Retrieved 14 March 2023.
  31. ^ Smith, Oliver (10 June 2022). "Freetrade announces job cuts of up to 15% of staff". AltFi. Archived from the original on 10 June 2022. Retrieved 15 March 2023.
  32. ^ Browne, Ryan (15 April 2024). "Freetrade, Britain's answer to Robinhood, posted its first quarterly profit". CNBC. Retrieved 25 February 2025.
  33. ^ "Freetrade: UK challenger stockbroker launches commission-free investment app in Sweden". UKTN (UK Tech News). 10 November 2020. Retrieved 11 August 2021.
  34. ^ Madison Darbyshire (23 January 2020). "Freetrade stakes claim in Europe's fee-free stock trading markets". Financial Times. Retrieved 20 October 2020.
  35. ^ "Freetrade pulls out of Swedish market". Finextra Research. 2 August 2024. Retrieved 8 November 2024.
  36. ^ Sikder, Tareq (13 May 2024). "Freetrade CEO Adam Dodds Steps Down amidst Shifting Market Dynamics". Finance Magnates. Retrieved 25 February 2025.
  37. ^ Segal, Gerald (1 October 2024). "Freetrade buys Stake UK clients and assets". FX News Group. Retrieved 25 February 2025.
  38. ^ Browne, Ryan (16 January 2025). "UK Robinhood rival Freetrade snapped up by trading firm at 29% valuation discount". NBC DFW. Retrieved 24 February 2025.
  39. ^ a b Kleinman, Mark (16 January 2025). "Freetrade faces investor backlash over £160m IG Group sale". Sky News. Retrieved 24 February 2025.
  40. ^ Dorset, Harvey (17 January 2025). "Backlash against Freetrade deal intensifies as chief executive posts on investor forum". Global Finances Daily. Retrieved 25 February 2025.
  41. ^ Oliver Smith (7 October 2020). "Freetrade launches its long-awaited Plus subscription with stop losses, limit orders and more". AltFi. Archived from the original on 19 November 2020. Retrieved 30 October 2020.
  42. ^ Emily Nicolle (29 January 2020). "Investigation: City fintech Freetrade accused of deliberately fostering 'culture of fear'". City A.M. Retrieved 4 August 2020.
  43. ^ Hinchliffe, Ruby (29 September 2020). "Why do some fintech start-ups experience high exec churn rates?". Fintech Futures. Retrieved 25 February 2025.
  44. ^ Hinchliffe, Ruby (30 January 2020). "UK fintech Freetrade hit by claims of toxic workplace culture". Fintech Futures. Retrieved 25 February 2025.
  45. ^ "Second Supervisory Notice" (PDF). Financial Conduct Authority UK. 8 February 2022. Retrieved 25 February 2025.
  46. ^ Shome, Arnab (10 February 2022). "FCA Orders Freetrade to Pull Down 'Misleading' Social Media Promotions". Finance Magnates. Retrieved 25 February 2025.
  47. ^ Tom Aylott (10 February 2022). "Three strikes: FCA forces Freetrade to remove influencer posts after rules breach". Trustnet. Retrieved 3 March 2025.
  48. ^ "Freetrade ISA investors face tax bills after buying fractional shares". The Telegraph. 24 May 2023. Retrieved 3 March 2025.
  49. ^ "British Bank Awards 2021 Winners". Smart Money People. Retrieved 13 July 2021.
  50. ^ "Good Money Guide Awards – The 2021 Winners". Good Money Guide. Archived from the original on 8 August 2021 – via Internet Archive.
  51. ^ "2020 Winners". British Bank Awards. Retrieved 10 August 2020.
  52. ^ Oliver Smith (8 March 2019). "British Bank Awards see Starling, Monzo, Zopa, Freetrade, Chip and Bud take home gold". AltFi. Retrieved 30 October 2020.
  53. ^ Richard Berry (10 May 2019). "Best Providers: 2019 Award Winners Announced". Good Money Guide. Retrieved 30 October 2020.
[edit]
Retrieved from "https://wiki.riteme.site/w/index.php?title=Freetrade&oldid=1278965201"