Hopefully 50m! Let’s get a massive fundraise and one last crowdfund 
Do they need £50M at this stage? massive fundraise = massive dilution
OK dilution isn’t all bad, but unless they have a plan for expansion that requires £50M I’d question the need for that much.
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Only Adam and Co would really know this to be honest, I guess we got to wait and see!
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They’ve gotta expand to the rest of Europe, don’t they?
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Yes, but does that mean they need £50M now? maybe they do, I don’t know, but it feels like people have plucked that figure out of thin air
The company I work for has a Market cap of ~£150M and employs over 600 people in several countries. I know people get dazzled by multi Bn valuations these days, but £50M is a lot of money
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A lot of money for 1 person, perhaps. But a company? I don’t think so.
QUESTION:
How does dilution work for crowdfund investors over say, 5-7 years? If there are no more crowdfunding raises, does this generally mean they will be diluted?
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if as suggested above they raised 50M at a 300M pre money valuation you’d be diluted by about 14%
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In a crowdfund we could pledge 14% of our existing investment to avoid dilution (using 14% as an example), correct? What if it’s a private raise; dilution is unavoidable?
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You will be diluted with any new share issues. FT might allow existing investors to exercise pre emption rights to maintain their % holding - but normally these rights are waived.
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Only the class A shares have pre emption rights. I think you had to put a lot in to get class A shares.
More than you had to put in to get Founder member status
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I prefer to look at the forward revenue multiples of comparable fintechs rather than just take blind guesses. According to this in 2017 Robinhood was valued at 30.95x its year end revenue and in 2018 40.57x year end revenue (the website only shows Robinhoods payments for order flow revenue which is roughly half of their total revenue). Nutmeg was valued at 27x-34.86x year end revenue and Moneybox was valued at 43.24x estimated year end revenue.
A similar valuation for Freetrades £5.2m 2020 estimated revenue would have been £140m-£225m (and the last round ended up exactly at the bottom of that range). For 2021 £33m projected revenue that would be £891m-£1426m+. Is Freetrade on track to hit £33m in revenue next year? Seems a little optimistic to me.
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So what’s your estimated valuation?
That’s basically every current sign-up having Freetrade+ for the entire year. This seems extremely optimistic.
I imagine most accounts are basically inactive beyond claiming a free share. Given the estimated AUM/user I’ve heard is around £2k this means that one large ISA of ~£100k implies 49 almost empty accounts and even 1 full ISA year is 9 small (0-revenue) accounts. Adjust these numbers if you have a better AUM/user estimate.
If the average non-zero revenue account holds £20k that implies ~30k paying users which at £150/year is £4.5m. This feels very generous, I would expect the average paying account has more than £20k and generates less than £150/year so £3-4m feels much more reasonable.
2021 is much harder to estimate
SIPPs bring massive potential for significant asset inflows, which could create a lot of £120-£300 revenue accounts.
I also expect the FT+ 3% interest rate will inflate revenues massively compared to earnings, a load of people (like me) will actually end up going from a net payer of £3/month (+FX) to a net payer of £0/month (+FX). This reduction in earnings will show up as a +233% increase in revenues.
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Haven’t you also got to take the .49% fx fees for US stocks into account?
Not that it’s huge - but it adds up.
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£50m = 250,000 SIPPs at a acquisition cost of £200/user (assets £40-70k). So £50m only buys you SIPP revenues of £30m and 10bn in AUM (e.g. taking ~1/3 of HL SIPP)
This is probably a little conservative, but still you get the idea they need a lot of capital to acquire SIPP users from other providers.
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I think FX will be meaningful but it’s hard to estimate. I guessed at this vaguely by inflating my revenue/user estimate:
As there are much cheaper alternatives for large accounts I can’t see anyone blowing £100/month+ on FT FX fees. I imagine most large FT accounts trade mostly UK stocks / ETFs.
As previously demonstrated most accounts are probably very small and provide negligible FX income.
This leaves the mid-size maybe paying £5-10 a month on FX, I can’t imagine this is a massive group as I expect most are buy and hold types or UK/ETF investors.
I’d be surprised if FX revenue is much over £1m in 2020, but maybe I’m underestimating some very active traders.
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Well let’s hope we get an update from Adam soon to clarify the deets. My goodness though whatever the numbers are they are gonna be great and for that reason we should all take the time to reflect on what a fantastic decision it was to invest, big or small, in Freetrade. We are all allowed to dream where this could go right 
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One thing I’ve learned over the years is not to count my chickens until they’ve hatched. Looking forward to some updates though!
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Oohh come on now, stop with all that sensible talk. 
. Don’t worry certainly not planning in a roast chicken dinner party just yet but the eggs are looking mighty healthy. Quietly confident here - good luck all 
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