Forum AMA with Freetrade CEO & Founder, Adam Dodds, Thu 26 May

[Freetrade_Team]

Hi everyone

@adam will be here for an AMA this week to answer your questions on the recent fundraise and our expansion plans.

ICYMI:

New fundraising round

Hi everyone. We’re pleased to let you know about our latest funding round. We’ve raised £30m from existing and new investors. We raised this capital following a period of strong performance for the business amid volatile equity markets. The money strengthens our balance sheet and provides us with the firepower to continue to develop our product and meet the needs of our customers in the UK and Europe. With this new capital, we’re excited to accelerate our plans. You can check out more details …

Drop your questions below by 12 PM on Thu 26 May before Adam jumps on to answer them, right here on the thread.

[hookedinvesting (@hooked_investing(IG))]

Congratulations on securing the £30M Adam.

A few obvious questions first:

• What can you share about the terms of the convertible loan note?
• What’s the split amongst new and existing investors?
• Will the new investors be given seats on the board (or other positions) ?

[hookedinvesting (@hooked_investing(IG))]

EU Expansion questions:

• What’s the plan for rolling out across the EU, will you go country to country or open it up to many EU territories at once?
• Which countries will be focused on after Sweden?
• How will you prioritise developing individual countries tax wrappers?

[NeilB]

Question 3

Hi @Adam

Has there been a strategic change of focus away from user growth into shipping products and therefore generating revenue from existing users. There appears to be less vacancies listed on the careers page is this intentional to reduce cash burn / runway to profitability? Any news on appointing CTO?

With the departure of Nick Fell, VP Marketing, and the well earned promotion of @Viktor have you got plans for a CMO / new VP Marketing?

I have a question about the community. Do you plan to the community to become app native as opposed to a stand alone platform. If it is going to be migrated into the app do you see it performing a core role like shares.io or an evolution of the current set up?

[SonnyP]

Considering the declining multiples in the fintech sector, how much revenues Freetrade need to achieve to sustain a £650m valuation in the next equity round?

[J4ipod94]

Which product features are you most excited to deploy this year?

[Pdw]

Can you release accurate ish timescale for crypto support and can you drop any hints about the next up coming features to be released ?

[Cameron]

1. Delivery Pace
Are you happy with the current pace of product delivery? If not are there any particular bottlenecks you’ve identified? Based on the latest pitch deck this deal represents ~6 months of runway and from an external perspective it doesn’t feel like we are seeing huge progression in that time - i.e. we aren’t in a materially different place to the last raise but I’m aware there is a lot we don’t see so any colour would be appreciated.

2. Revenue Expectations
At the time of the last raise you mentioned on twitter that you expected to do £100m revenue this year, are you still confident in reaching that?

3. Profitability Goals
Given the changing climate in capital markets (as evidenced by the nature of this deal) is there any view to changing goals towards achieving profitability sooner? (latest decks don’t give a guide for reaching profitability). Edit: Or alternatively, reducing burn rate (as @rod mentions below)

4. Influencer Marketing
Influencer marketing seemed to be a big part of Freetrade’s growth (or at least prevalence of it seemed to correlate with a lot of growth) - do you hope to be able to re-enter this space domestically soon?

5. Product Roadmap Breadth
Finally, the market(s) in which Freetrade (seeks to) operates are getting a lot more crowded and competitors seem to be moving relatively quickly. Is any consideration being given to a narrower product roadmap to better differentiate Freetrade in key markets?

[MJE (Mike)]

Any firm ETAs on deploying fractional UK shares and UK REITs being available for ISAs?

[szb (Sergey)]

+1 on every question. May be if you could add numbers to the questions so it is easier to track replies to each one

[NeilB]

Good idea @szb if @adam can reference the number we can all follow along - next hymn is 88 “Where is my hoodie? Oh lord bless thee”

[rod]

Cameron’s questions are all excellent.

@Cameron

Given the changing climate in capital markets (as evidenced by the nature of this deal) is there any view to changing goals towards achieving profitability sooner? (latest decks don’t give a guide for reaching profitability).

… or if not achieving profitability, is there a view of changing the execution model/cost basis to extend the runway? Maybe Adam can talk about how Freetrade sees those decisions?

(In 2000 I was at a recently IPOed startup. As the dotcom crash started, market expectations shifted overnight from “maximise user growth” to “maximise profit immediately”. Quite painful times and painful decisions, though the company survived.)

[szb (Sergey)]

1. Copying my question from another thread. @DanielE shared clearly the remaining work to be done on European expansion.
   Could you provide key reasons for such a significant delay?

MEGATHREAD: European expansion

@adam @KarlB could we get a comment on this, please? How did we get from expecting to be in the whole Europe before the end of 2021 to unreleased Swedish app 5 months into 2022? What explains the delay? Covid and Brexit was a known factor when the timeline above was shared with the crowd. As for the licence - it has been granted almost 3 months ago. Have signed up for the Swedish wait list a couple of weeks ago to see if I get an invite to the beta, but haven’t heard since. What’s going on?

2. The team mentioned a few times that the main focus last year was building European infrastructure which delayed other projects. From the outside it is looking like a massive investment of time and resources that has not been complete yet (Euronext Paris is one of the large missing pieces, for example).
   Could you define what infra exactly has been built by FT over the last year?

It seems like you are using Equiduct to access the markets in Europe, so FT is not an exchange member for any exchanges, correct?

From the outside Equiduct looks like a 3rd party provider like Drivewealth providing access to exchanges via an intermediary. Why are you saying that FT has built a direct access to European markets than?

What part of the infra exactly is owned by FT?

If FT is already plugged in with Equiduct why does it take so much time to add the missing exchanges Paris, Milan, Madrid?

Appreciate that this might be complex and open-ended questions but since this was mentioned by you and the team a few times would be great to have a clear understanding on this one.

3. What is happening with the CTO role? Will the positioned be filled or someone promoted internally?

4. I stumbled upon the FT’s Plus ad recently which was awesome.
   https://www.youtube.com/watch?v=LzuKSUt2moQ
   This ad is 1,5 years old already and the premium product has seen zero improvements from the launch except for the added stocks in the Plus universe. The message at the time was crystal clear - to make Plus a no-brainer with the amount of the value add for the user.
   Do you think the current value proposition of Plus is a no brainer? When will the premium tier see some love from FT =)

5. I am not interested by this cause I am outside of the UK, however lots of people have requested sipp employer contributions. The SIPPs are currently one of the greatest differentiators for FT in the UK. Is the feature coming this year?

[Cameron]

Edited, thanks

[hookedinvesting (@hooked_investing(IG))]

Expansion outside of EU:

• How are the licence applications progressing in Australia and Canada?
• Are the Australian team actively working on AUS accounts, outside of their work on Crypto?
• Do you expect Freetrade to launch in Australia/Canada before the end of the year?

[Callum (cbacbacba74)]

Lots of good questions have been asked already. I have one other question regarding competition.

1. How do you see the increasing competition from the dozens of new stock brokers popping up in the UK affecting user growth and pricing power for Freetrade?

[Raul (Ann Onymuz)]

1. Are we worrying about the competitors or are obsessively focused on serving our customers, while paying attention to what competitors are doing just in case we can learn something from them?

2. Can we use the Freetrade app when on holidays on the International Space Station? (this has to be the best question I have ever asked which serves to show there’s room for improvement for my question asking skills)

3. Any chance we can have a shareholder meeting or AMA on the metaverse? (I’m in search of a rationalised excuse to buy an headset)

[esteban (Esteban Ferré)]

Considering the current financial environment, are you considering putting the expansions to Canada, Australia and Japan on hold to reduce burn and focus on Europe where you already have a licence?
It seems to me that getting a licence (among other expansion related costs) is a lengthy and expensive process.

[nim]

Congrats on the convertible round. Perfect solution for the current market.

1. I would like to see the introduction of recurring and regular investing enablement for our customers. i.e. autopilot, sweep of funds from saving pots in monzo, employer sipp. When can we expect this? This should significantly improve AUM.

2. Please look at partnerships with TransferWise & Monzo, they have a massive customer base - potential to reduce Fx fees for joint customers of TransferWise and maybe £1-2 savings for Monzo customers. Are we considering any partnerships?

3. Enhance the referral model, free shares are great. However, I think free shares should only be given post completing a Freetrade course and a social media post. Increases awareness and educates potential customers - are you considering a change to increase revenue on the back of these customers? What are the retention rate for these customers? Do you do follow up mails for customers which don’t fully convert?

4. I want to invest in the convertible, will it be available to the crowd? Any info on terms?

5. Crypto bear market and retail lull is great for our delayed roadmap. I think we have 3-6 months before markets start to pick up significantly - can you advise what from our road map will be delivered by then? We need to capitalise on this.

6. We need to improve our ability to educate customers and help them make diversified trading decisions. Can we include diversification scores or any other sector based reporting? I honestly feel Freetrade customer will benefit from this education.

7. Not a question, but good luck. This year has huge potential.