Crowdfunding round seven, Wed 24th Nov 2021 šŸŽ‰

Likely for options.

Thatā€™s Ā£9-10 a share based on my calcs. Given our investments are completely illiquid right now, whether itā€™s Ā£10, 11 or 12 or even 15 this round is almost irrelevant. Letā€™s wait until when it really matters in 2-3 years when we will be looking at many many multiples from here.

The good news is that this should bring in 10,000ā€™s of loyal FT ambassadors to really increase users and size of portfolios in UK and EUR.

Letā€™s not forget where we have come from. For R1 investors this represents X110 and R2 investors X60 :pray:t3::rocket::sunglasses:

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Yeah this filing on 22 oct for Aug 11 shows 64.1m so I guess there have been more since

22 Oct 2021 Statement of capital following an allotment of shares on 11 August 2021

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64m shares + 6.1m options = 70.1m Ā£650m / Ā£70.1= Ā£9.26 a share.

Iā€™m a lot more interested by the fact we currently have a Ā£24m revenue run rate and Adam thinks itā€™ll top Ā£100m in 2022. That and opening offices and scaling in Europe, Japan, Canada & Australia should drive a future IPO at least 3-5 x the current price.

58 bags from my March 2017 investment & still very good upside for new investors. Win win.

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So looks like share price will be around Ā£9, so people from round 4 will have gone 10x return? I believe the round price was 84p.

Overestimation on the share price from people on the forum here :grin:

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Yeah I just noted the same on my valuation model, a big miss this year but they are increasing the estimate for next year so they must have some big expectations for scaling quite early in the year.

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Itā€™ll be the huge user influx that theyā€™ve seen since the big OOH campaign kicked off a few months ago, 100k funded users joined in October aloneā€¦

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Really donā€™t understand people disappointed by the valuation. Average account size is still much smaller than peers, AUM is lower than they previously forecast and revenues havenā€™t really got going yet. They apparently achieved Ā£1m for the month of December 2020 so Ā£10m for the full year is less than I expected. Still making great progress and the guidance is very encouraging but I think there is a need for a dose of patience here!

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Any idea on the burn rate?

The story is very good overall. The raise is only 2% dilution so very immaterial to long term prospects.
It creates a step based story for valuation. So good overall.
Revenue projections hitting close to 100m over coming 12 months is great.
AUM is not as material for Freetrade as other competitors. More reliant on subscription revenue and all that.

Itā€™s a fair price for incoming investors. And still a hefty uplift year over year. I would have loved 1bn but itā€™s also a sales tool.

Good job Adam, Viktor and the team.

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Hi guys,

I am a previous investor, so is the process I just get em email some time shortly before 10 a.m. to access the crowdfund?

Has any previous investors already received information by email?

Agreed, I think this is a huge achievement and assuming the round fills this is very cheap capital for FT to grow, I think people got a bit carried away with the huge growth in signups.

Even if this capital just went into acquiring SIPPs (via free share promotions) they could probably add Ā£4bn in assets & Ā£20m in revenue with that, although Iā€™m sure they have more effective uses in Europe.

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@adam @Viktor please please can someone update capdesk tomorrow with the new share price? Please?

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Surprised by how low the valuation is , given that Trade republic raised at $5bn - I have no idea what the VCs saw in them to justify such a premium (all we know about them is they had ~1m customers and ~6bn EUR in AUA at the time), but itā€™s safe to say that valuation was an outlier;

Interactive investor got acquired for Ā£1.5bn with Ā£133m in revenue (AND ~Ā£40m in profit), Ā£55bn+ AUA, 400k+ active users - they are also growing fairly fast (but not as fast as FT) at around 40% YoY (revenue, profits, users, etc). Thereā€™s also DEGIRO, who were acquired for ~250m EUR (IIRC) with ~500k users.

So yeah, on reflection, imo it would have been irrational for FT to ever fetch more than Ā£1.5bn. Hell, even Ā£650m is probably a bit steep (30x revenue multiple on their run rate), but when accounting for the growth, itā€™s a bit more palatable. I was so sure that the valuation was going to be ridiculous that iā€™d written it off, but will definitely consider it now.

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Absolutely. The product still has rough edges and lacks some basic elements but there is a clear route to profitability and heaps of untapped potential. I think they will ultimately need to widen their demographic and find ways to attract older investors with larger amounts to invest to deserve a seat at the top table but amazing to reflect on how far they have come.

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I agree that having experienced investors onboard will be a massive boon to the business, but itā€™s going to be a hard sell without refactoring the app/service offerings and marketing angle.

At least currently, Freetradeā€™s whole mantra is around ā€œget everybody investing.ā€ Itā€™s pretty transparent that the strategy is to swim in the blue ocean, attracting millennials/zoomers who arenā€™t currently investing. In which case, encouraging these new investors to begin investing increasingly larger amounts of their income on a regular basis may be a lower hanging fruit.

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Struggling to find the words to describe how disappointed I am by that valuationā€¦however ā€˜Freetrade is worth less than what Trade Republic raised earlier in the yearā€™ comes close :sweat_smile:

Whatā€™s equally worrying is the information Adam shared:

  • 550,000 dud accounts
  • Significantly missing revenue targets
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FT proving its product market fit and great engagement metrics is what we should be celebrating vs criticising low valuation. Ā£650m pre money with Ā£25m revenue run rate is by no means low. It will fetch Ā£ unicorn status by April - May 100%. FT reached Ā£25m runrate revenues vs Ā£1.7 actuals it reported in September 2020. Retention rate of 90%.

Letā€™s wish them a crushing crowdfunding tomorrow.

Well done Adam, Viktor and team!

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Circa5000 an Fintech are raising in crowdcube right now and claim to be in the top 10% for customer retention with 59% after 12 months. Given the 1,100,000 user has been built over many years this would seem to be in a similar retention.

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Where did you get the number of dud accounts from?

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