I’ve made some basic updates to my model and I think this is about right to decide what story you are telling for FT at maturity/exit.
Assumptions
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Brave man 
£3-4.50 sounds about right to me.
There is no way on this earth are Freetrade only valued at £227.065.320. I would suggest double at a minimum which would mean £6 a share.
Thanks for the charts
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I think it’s still a pretty aggressive valuation all things considered.
£6 would likely be pricing up growth to ~£15-25b AUA (depending on your assumptions) that doesn’t leave much room for upside from where I’m looking.
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The funding environment is radically different now: Freetrade is losing a lot of money and so there’ll be a significant valuation penalty because of the risk of the business as a going concern. During fast-and-loose funding environments, when money is abundant, there’s little concern about things like profitability because a business can sustain itself by raising more money. Potential and growth are wonderful, but only if you can survive long enough to realise the benefits.
You can think of valuation as a product of narrative: the previous round took place in a funding environment where growth and potential were the key narrative drivers, which allowed Freetrade to command a significant valuation because it had growth and potential. The narrative that drives valuations today is not growth or potential, but rather, survival without funding: the music has stopped and everyone has realised that raising more money isn’t a given anymore, so, they’re no longer willing to shovel money into a company that is reliant on something that has disappeared.
If this round is entirely crowdfunded you could expect Freetrade to get away with a valuation in the region of what you’re suggesting but assuming this round has participation from outside of the crowd – almost certain given the amount of money they need – I would be shocked to see it anywhere near the previous valuation. I think something closer to £3 is much, much more likely – perhaps, even less, a share price of £1 would not surprise me. Multiples have fallen through the floor.
Anyway, this isn’t a bad thing, in fact, it’s the opposite. If you believe in Freetrade, if you believe that Freetrade is going to be worth billions in a few years and that they can survive this funding environment, then their need to raise in this terrible funding environment is an amazing opportunity for you to fill your boots with cheap equity.
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Yes they have
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Won’t be any EIS allocation; that ran out awhile ago.
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bad time for crowdfunding also for great company like Freetrade.
It would be interesting to know the reasoning for the timing of Freetrade crowdfunding.
Crowdfunding has occured every year! Last round was September 2022. Do you think there is a significance with June 2023?
Going to be an interesting to see the valuation and share price, specially that it has only been 6 months since Monzo was showing interest in FT.
GO GO GO GO GO…
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QED recently raised a monster fintech fund! This was talked about on the Fintech insider podcast, it doesn’t mean the bottom is in, but it’s certainly a positive signal for fintech. They were thinking the confidence shown here might spur other funds to raise and others to deploy.
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2023 share price and valuation just announced on the stream:
£2.60
£225m
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What price does the previous CLN convert at?
At the stated discount (20% from memory) to the latest round valuation. Just stated in the Q&A
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This aged like milk left out in the sun today.
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By luck or otherwise my model held up surprisingly well today.
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It’s a very fair and realistic valuation. They shouldn’t have too much trouble raising a few million at this price IMO.
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