This is also something I canāt really understand. I think we may be missing some information otherwise itās really really hard to justify that lower valuation after stronger 2024 financials.
Quite simply Because of principle, something the board @Viktor donāt seem to have.
There is no trust in the them anymore. How can there be after theyāve screwed over their investors (who largely are users)?
Also where is the transparency on this sale? Where are the details? Why did we get to vote on it? Where did the valuation come from? What is the boards renumeration now and after the acquisition?
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I mean judging by all the replies here weāre all bitter so no need to apologise!
It just seems like bit of a knee-jerk reaction to me to move purely on the basis that your investment in the platform didnāt work out. Itād kind of be like someone who loves Nike trainers to swith to Adidas just because they lost money on shares.
I mean if I still liked Freetrade as a product then I personally wouldnāt see this impacting me as a satisfied customer, but everyone is entitled to their views. Hell some people may not have been happy and seen this as a last straw.
Either way thanks for the insight, alwways good to understand othersā views!
Dilution has nothing to do with valuation. Dilution will influence the share price but not the valuation.
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@Racxie well obviously for many reasons shareholders arenāt happy. People feel like management are treating crowdfunders badly, with a lot losing money. Never mind the painfully slow improvements, false promises etc. Why canāt you understand that would make these people leave?
35% loss in 5 year investmentā¦ Ouch! 
Not complaining though, you win some, you lose some!
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You call it bitter and knee jerk, because weāve invested in a platform that didnt work out. Exceptā¦ The platform did work out .
What has happened is @Viktor and the board have taken a CHOICE, and that decision was consequently to screw us over. Something fully in their control.
Why not let the investors vote?
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Iām not jumping ship. however I do have plus for life, from investing a decent amount in R2. If they stop honouring that I might be goneā¦
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What do people think about alternatives? I think Trading 212 is a bit questionable (grew via CFD trading, was based in Cyprus for a bitā¦). Vanguard doesnāt have the best app / ability to invest in single shares. HL and AJ Bell have high feesā¦
Is interactive investor the way to go? Anyone used them?
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Because theyāre ditching a product for the way theyāre being treated as investors, not as customers. Again if you had invested in Nike because you loved their trainers, and suddenly Nikeās stock price tanked and you lost a lot of money, would that seriously be the reason you stopped buying Nike trainers?
IG seem to be focused on the execution business and the technology stack (my read) and would likely want to shift customer base over to higher margin products cough CFDs cough
Yes and the OG was about the share priceā¦?
Iāve been reading your comments here and I appreciate the range of reactions.
I wanted to reach out and offer some more context on this deal and what I shared with our team this morning.
When I took over as CEO, I laid out to the team at Freetrade two goals:
- Get Freetrade to a position of strength and,
- Create the future of Freetrade.
We delivered our best performance ever as a business in 2024. We upped our delivery pace, released a lot of new features and products, rapidly grew our segment of customers with Ā£10k+ portfolios, and we became cashflow positive at the end of the year.
This meant we were in a position of strength, and we had a number of inbound expressions of interest in the business both from prospective investors and strategic partners.
To get our growth to take a step up, so that we can truly challenge the incumbents in the UK self-directed investment market, we would need investment in some form.
We considered this investment thoroughly and at length with Freetradeās management and board - we looked across the universe of potential investments ranging from IPO to primary VC fundraising. Because of the competitive interest in our strong business, we felt that we needed to formally consider our options.
I appreciate that for many of you who backed us after our Series B this means that your investment is being realised at a loss.
This was front of mind as our Board considered Freetradeās options.
As mentioned above, we considered alternative paths like a capital raise, which would have resulted in heavy dilution for ordinary shareholders, or carrying on reinvesting in our business, that probably would not have resulted in the growth that we need.
As for crowdfunding results, in aggregate we are returning more cash to our crowdfunders than we accepted as investment, an average overall return of 1.1x, with those from Round 1 generating 15x. Of course any investing carries risks and itās worth mentioning that only 5% of crowdfunded businesses actually ever return any cash to their shareholders.
Everyone who backed us before our Series A generated on average 2.7x and everyone who backed us up to our Series B generated on average 1.7x. For transparency, the returns for each round are here:
| Round | Share Price | MOIC |
|---|---|---|
| July 2016 | Ā£0.08 | 15.1x |
| February 2017 | Ā£0.15 | 7.9x |
| May 2018 | Ā£0.52 | 2.3x |
| April 2019 | Ā£0.84 | 1.4x |
| June 2019 | Ā£0.96 | 1.2 |
| May 2020 I | Ā£2.51 | 0.48x |
| May 2020 II | Ā£2.51 | 0.48x |
| November 2021 | Ā£9.25 | 0.13x |
| September 2022 (Conversion price) | Ā£2.08 | 1x |
| June 2023 | Ā£2.60 | 0.46x |
In reaching this deal our Board balanced whatās best for our shareholders, employees, and, most importantly, our customers.
This deal is going to enable us to accelerate the delivery of an exciting roadmap of new products and features. This means delivering products like mutual funds, JISAs/LISAs, essential improvements to our SIPP, bonds, gilts, and more.
Itās also going to give us the foundations to grow,seriously compete in the investment platform market, and build a fintech out of the UK with strong and consistent backing.
Iām personally grateful for all of our crowdfundersā backing. I appreciate these words may offer more or less comfort for some, depending on their investment return, but we wanted to provide context.
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Investors did vote and 75% said yes?
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So a good return for you but a real terms loss for mostā¦
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Can anyone confirm whether Series B1 and B3 shares get a premium because in the investment contract there was a minimum amount they could get back?
If thatās the case then they will have backed a bad deal because it wouldnāt make a difference to them. E.g
@Ā£2.60/share the Series B3 shares are 2.18 x higher than ordinary shares. That means FT could have sold for Ā£345M and they wouldnāt have made a penny more. So why would they bother trying to grind out a better deal!?
But surely in this case we need to push crowdcube to argue in our favour. Nobody else seems to be shouting for us
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This still doesnāt address why you think itās fair for VCs to get a higher return than crowdfunders. Freetrade crowdfunding was pitched as a community-first approach, but the outcome suggests a preference for VC interests. Why werenāt crowdfunders given the same opportunity to benefit?
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It is not fair but it is in line with the protections typically granted to private funders and is just the way things are. The only āfairā thing to do would have been to avoid a sale like this or offer shares etc. but the added protections for VCs were always in place!
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If FreeTrade still exists in 36 months I will be shockedā¦ itāll get the usual corporate rebrand to include IG in the name. Then the merging of platforms, makes no sense from a financial perspective to host two platforms essentially doing the same thing. Merge the customers and increase your customer funds under management.
They might keep the SIPP as a separate thing for a little longer, itās essentially the only thing IG doesnāt do yet as far as I can see. But even that eventually makes sense to merge into the IG portfolio.
In reality they bought the customer not the platform.
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Wait sorry no disagreeā¦ IG Group are after the platform not the customers in my viewā¦