AMA: Ask our CEO Adam your questions about our upcoming crowdfunding round 🗣

[userfy_123]

Doddsie I’ve got a quick question:

How much money do you need to raise this round to fund your expansion plans for the next 12 months? £3m+?

[saf]

There was a mention of a partnership with a challenger bank. Is this still happening? Any ETAs? More generally do you see partnerships playing a big role in growth?

Do you see a aggregation play whereby holdings from other providers show in Freetrade. For example a Vanguard, or PensionBee, or even Roboadvisor portfolios?

How important are traditional metrics like Assets Under Management ( AUM ) for Freetrade?

Are there any plans on introducing a scramble mode for the app? I’m thinking it might make it easier to share/show/demo the app.

[neovo]

[adam]

Hey everyone

Thanks for joining me on a bank holiday Friday morning!

I’m currently on family holiday in Malta and will try and get through as may questions as possible now, but we’ll also be having the open hours at our office on Tuesday evening and then I’ll be furiously answering questions again when the official Crowdcube campaign starts next Thursday at 12 noon.

One thing to note, this AMA is meant to answer any questions you have about the upcoming crowdfunding campaign logistics and such. I want to make clear it is not a public offering and much of the details of investment offering are only appropriate to be disclosed as part of the FCA-regulated crowdfunding. That means specific information that would only be released as part of the investment materials on our Crowdcube page will need to wait until Thursday, when it will be available to all Crowdcube members through their website.

I’d encourage everyone to sign up for Crowdcube in advance as an account would need to be created and there is a questionnaire etc that does take a bit of time.

That said, I’ll share what I can now

[adam]

@Dashriprock

Is this going to be the last raise or will there need to be further raises in the future ?

This will almost certainly not be the last capital raise Freetrade does as we have very ambitious plans for growth in the future.

It may be the last raise we do as pure crowdfunding though as there is a limit set by the EU on how much a company can crowdfund without a prospectus. But of course we could issue a prospectus, similar to how Monzo and Crowdcube itself have done before, but we haven’t made any decisions on that yet.

[adam]

@nico850

If possible, it would be great to have some information regarding:

1. Today actives users accounts
2. Growth parameters (any estimation of users you plan to reach in the next quarters, considering European Expansion)
3. European Expansion will be in the 3rd or 4th quarter? Which EU countries are potentially the first ones in Freetrade horizon?
4. Any information about financial situation, incomes and/or forecasts will be appreciated.

We’ll release up-to-date user numbers and financial projections as part of the crowdfunding investment materials. We’ll also release the most recent audited financial statements (not yet filed at Companies House).

In terms of EU expansion, that is one of the main reasons for raising more capital. We currently have a regulatory passport to offer Freetrade to residents in the EU, but we’re not sure if we will be able to use that going forward to have to resort to Plan B due to the ongoing Brexit shambles. Regardless, we will be coming to the rest of Europe, I just can’t say the timing yet.

[craigthekiwi (Craig)]

Hi Doddsie, hope hols go well. Two questions.

Any advantage of using a different crowdfunding platform to get new exposure in next raise?

Any plans to ‘give credit’ to members who help spread/share the word and get sign ons? I’m singing from the hymn sheet and love the app…but i see more and more of this in new apps driving sign on.

One area that I don’t see transparency on app is the spread on the buy and sell of the share (a hidden commission). Is there a point where this would be visible?

Thanks!

Loving the app. Happy to see lots of green on my portfolio

Craig

[Raul (Ann Onymuz)]

Hi @saf
Please forgive my ignorance but what does

@saf

a scramble mode for the app

mean?

[adam]

@kenny

The questions I have are:

• What will be the global limit on funding (not target but the cap for overfunding)?
• What is the new pre-money share price/valuation?
• EIS - but I think you’ve already answered you’re waiting on HMRC
• What is the current active user count?
• Do you see growth as your most important challenge now, and what are your plans to supercharge growth this year?

Finally, it’d be nice if existing investors had an hour or so, rather than just 20 minutes.

The hard limit on crowdfunding in this round is dictated by EU regulations on crowdfunding without a prospectus, being €8m per 12 month period (c. £7m). As we raised £3m less than a year ago, that gives us £4m of room for this round.

We’ll release the specific details on price per share etc with the opening of the Crowdcube page, but I can say the pre-money valuation will be roughly double last time.

EIS also has a limit per 12 month period, being £5. So only £2m could be potentially eligible and we would allocate this on a first-come-first-served basis via Crowdcube. We don’t have advance assurance from HMRC yet, but have applied, and have never had an issue with SEIS or EIS eligibility in our past rounds.

Finally, on growth, we have some exciting plans that I’ll leave Viktor to talk more about. But I will say that the most effective channels for us have been referrals and content and we plan to double down on both.

[saf]

Scramble mode would hide the values of the shares you own. That way you are not leaking your portfolio size when you show the app to someone.

[craigthekiwi (Craig)]

Your contents been good. Can see this as a helper. Main thing I hear with people is they don’t know where to start with investing in shares. Or not confident in choosing a company. So more general content on having a variety of investments in portfolio (not investing all eggs in basket) and not all in shares. Maybe som individual people examples…Sarah earns x and invests in pension x and shares x etc… so far so good!

[adam]

@anon1435622

How will freetrade outcompete it’s rivals (Revolut, Robinhood, BUX stocks, etc)?

Do you believe this is a winner takes all market, and why (not)?

I ask because I personally don’t think broker loyalty is a thing, so it becomes a race to the bottom as investors just switch to the cheapest platform. From what I can gather, Robinhood offer instant trades for free, their premium product offering out-of-hours trading and margin trading as incentive. This undercuts freetrade (alpha) and is a large threat in my view.

I think our Product, Brand and Community are Freetrade’s greatest differentiators vs potential competitors that may offer similar charging structures.

When you look at various markets around the world in the stockbroker or investments space I think it is clearly not a winner takes all market. There does tend to be a relatively small set of dominant players that compete on factors beyond just price.

[Raul (Ann Onymuz)]

Thanks @saf, appreciated.
I like the idea. For privacy

[adam]

@James101

Are there any plans to add Asian stocks, or bring the product to Asian markets eventually?

When we vastly expand the universe of US stocks in the coming months that will include a lot of Asian companies (notably Chinese) that have ADRs listed in the States. But, yes, we do intent to offer Asian-listed securities but it’s not on the short-term roadmap for now.

EU expansion is up first, but we’d love to offer Freetrade beyond Europe in the future.

[craigthekiwi (Craig)]

NZ and Australian banks still make too much money as no competition. Freetrade would do well there and all English too.

[caribo (paul)]

@adam, any plans to integrate with Monzo?

[adam]

@saf

Hopefully someone with more insight can communicate the motivations behind only offering B Shares.

We’re only offering B Investment shares in this round and these would be available to all existing shareholders equally regardless of previous investments.

Having a large number of A shares carry an extra administrative / corporate governance burden with respect to voting matters (we’re not keen to run Freetrade like a public company yet!). There are also restrictions placed on A shares by our Articles preventing transfers or sales, so B shares offer more flexibility for shareholders to do as they see fit without requiring rather onerous procedures for the company to facilitate.

[adam]

@PoemofXtasy

What’s the average portfolio balance?

It continues to increase every week as we build trust with our customers. It’s always nice to see the big spike around payday. I expect to see an increase once we add the ability to transfer in accounts from other providers.

We’ll release more details in the investment documents.

[Jeff (Jeff puckering)]

I imagine this months portfolio sizes won’t grow too much, it will all be going direct to freetrade