Last year we set a new record as the first company on Crowdcube to raise £8m in less than six hours.
This round is a little different.
Earlier this year we raised money from existing and new institutional investors through a convertible loan note.
We’re now opening up that investment opportunity to our community of over 17,000 crowdfunding investors, and anyone else who wants to join!
When you invest this time, you won’t receive shares immediately. Instead, your investment converts at a later date (and within 12 months) into preferred shares in Freetrade.
That means that when this round goes live, there won’t be a valuation disclosed. Instead, the value of the shares you eventually receive will be determined when your investment converts.
We’ll also be holding a community meetup next Tuesday 13 September, save the date. More details to follow very shortly!
See you soon,
Team Freetrade
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Investing in start-ups and early-stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. Investment opportunities are not offers to the public and investors must be eligible Crowdcube members.
Is this round happening through Crowdcube? I’m severely against their Success Tax model that skims off our profits when we’re winning but doesn’t compensate us when we lose with our crowdfunding investments. I’m happy to pay them a flat fee but if they want the rewards of investing then they should take the risk themselves.
In other news… these convert at “either at a 20% discount to the valuation of that round or a pre-money valuation of £400m (whichever is lower)” or in other cases at £3.77.
The share price now would be significantly lower than R7. A CLN is smart as it allows FT to get the money without revealing the depth to which the share price has sunk to.
The email said FT was trading at a 30x valuation which was similar to other high growth companies… many of those companies are down 80% now, if not more.
Will any of the proceeds from this round go towards paying back the institutional investors loan? Reverse Robin Hood (excuse the pun), taking from the poor to give to the rich?
What are current revenues? What is current observable share price?
Retail stockbrokers have taken a beating and VCs have not favoured such companies - is the retail crowdfunding route all that is left as an option?
Imagine the smart institutional money is going elsewhere and there must be a reason for that?
What is it that is special about Freetrade that would entice me to invest?
’ A Convertible is a type of equity funding round. Companies generally raise capital through a Convertible as part of their funding strategy if they’re looking to get funds quickly, opening up equity to their valued community, or in the process of securing cornerstone investment, and have a larger funding round coming up in the foreseeable future (roughly within six months).
A Convertible is very similar to a regular equity round on Crowdcube. However, the company doesn’t set a valuation or a share price. Investors pay an amount (a multiple of £10).
At a later date, the Convertible amount is converted into shares, usually when the anticipated follow-on funding round is completed. Generally, a company will complete a follow on round within a certain time period after the Convertible round. The follow-on round can be on Crowdcube or it could be a VC round etc.
If no follow-on round happens your investment will be converted into shares by the agreed long-stop date and at an agreed long-stop valuation. All details will be confirmed to you when Crowdcube issues your shares.
Generally, by investing in a convertible round, you’re investing early in that company and the value of your shares are greater than those in the next follow on round.’
Yup sadly Crowdcube is a part of this. @Adam and @Viktor claimed to be against middlemen so not sure how they square that up with doing this with Crowdcube or anyone that profits with no skin in the game from Freetrade investors.
I appreciate the need to use an external platform for the crowdfunding (don’t want it to end up like the merch distribution!), I just dislike Crowdcube’s Success Tax and don’t want to use them until they see the error in their ways and scrap it.
I imagine there’s a lot of internal politics around it too, with Molten having big holdings in Crowdcube and Freetrade. It’s not something I want to berate Big V and The A Man about too much because of that Molten link.
With reference to Crowdcube’s sudden imposition of a carry at the time of R7: I don’t think that Freetrade management played it fairly either … there were several confusing and misleading messages. With respect @Adam and @viktor are responsible for this. They did not answer several questions that were directed to them. When push comes to shove, in case of a complaint, I am sure the FCA would not be impressed.
Yes, it would appear that as Crowdcube is a Molten Ventures portfolio company it has something to do with it. But that is neither an excuse nor a comforting thought. Integrity is more than words.
