Worth a listen:
Sounds like it could be the end of crowd funding…?
Adam has mentioned he’d like the crowd to invest for as long as the regulations allow so I don’t think it’s the end but there certainly are limits. I am of the view that more VC money is also a good thing though, will push this to the next level and speed up the expansion.
Also interesting to hear right at the end of the podcast about the European expansion plans in 2021!
I can only assume, but I’d guess it’s going to need a big pile of money to build a good (easily expanded) web interface and for doing expansion into the rest of Europe properly, not to mention adding more foreign exchanges.
Indeed it looks like that might be the end of crowdfunding as we move into a mature company and upscale our funding capability.
Maybe there will be one more round next year … maybe.
I also got the impression that an IPO might not be far off?
AJ Bell IPO was at market value £650 million (2 more years growth for Freetrade?) and they currently have about as many customers as we do - once the SIPP is in place then skies the limit?
Surprising comments, thought they’d consider another Crowdfund
Time will tell
I’d love to see an IPO where we investors can stay invested. the absolute ideal would be to have our shares transferred to our freetrade account so we can manage our own investment
I’ve never been part of an IPO, do we have to sell up straight away? Are our shares converted but we stay invested? Are we locked in for a period (e.g. 6 months)?
Adam said some big stuff there and a slight divergence from previous suggestions that crowdfunding would continue alongside venture capital. I have to say I think spending large amounts of time for a few million is not worth the teams time. Just get 50 million cheques and be done with it. No need to spend hours and hours and release market sensitive info (tho we all love to have!). Here is the (loose) transcript:
Interviewer (Alex Chisnall): what made you consider other means of funding? - you’ve now gone down the Venture capital route
Adam: I think crowdfunding is great. There’s a time and maybe a place for crowdfunding on a start ups journey i think we’ve taken that to its logical conclusion which is, well we are now constrained as I was saying there is a limit by how much we can crowdfund. Anything over that and you are talking IPO you could do it through crowdfunding but why would you not do it on the stock exchange. So we are in that in between stage, not ready for an IPO but past pure crowdfunding and thats where venture capital comes in. That’s what we did last year and embarked on venture capital and found our perfect partner in draper …
Let’s not forget that it depends on the series B partner. Draper owns crowdcube and is ok to allow crowdfunding. Others might be not so willing.
Would not be surprised if new investors will also offer to buy out some of the shares owned by the crowd.
Anyway, I can only see the benefit in doing other crowdfunding rounds if the maximum investment limit is set to 1K pounds to maximize reach and using it more as a marketing instrument.
I would disagree - they aren’t doing it for the money - they are doing it to gain thousands of new investors who will want to spread the word about the product. I think they should do it but cap the amount you can invest to maximise the number of investors.
Edit: Sergey beat me to it! Must have posted at the same time!
I don’t think it will make much difference at this stage of the game. You tube ads are going out and millions will be going into advertising. Many of the investors last time were previous investors.
Freetrade is so big now it will grow on its own. There will be 500k users this time next year
I could see some benefit in doing more crowdfunding campaigns if they are on German or French (for example) crowdfunding sites and limited to €X investments.
Crowdcube recently (pre-merger) announced a new type of raise for companies which would allow existing shareholders to sell their shares at a new valuation. I could definitely see Freetrade approving something like this, as it would allow those who backed them in R1 or R2 to get a return.
But agree that Series B & C should be the main focus now.
There were still 1000’s of new investors in Round 5.
Most of whom probably were on freetrade tho. Remember all sign ups of freetrade were emailed. I just think that for the time it took Adam and the team in doing the crowdfund round for what 10k max more users going forward they will look to what maximises their time etc. Thats just 2 or 3 weeks sign ups nowadays.
I expect there will be 1 more round and I’m going to hazard a guess it will be the last in May 2021.