In recent years, financial technology (Fintech) has been on the rise, enabling new and previously unattainable financial opportunities for people from all walks of life. Online brokerages have become increasingly popular, allowing individuals to buy and sell various financial assets from the comfort of their own homes.
One such platform that has been making waves is Freetrade. In this article, we will explore what Freetrade is, how it works, and its unique features that make it an interesting choice for investors.
Overview of Freetrade
Freetrade is an online brokerage platform that provides users with the ability to buy and sell various financial assets such as stocks, exchange-traded funds (
ETFs), trusts, special purpose acquisition companies (
SPACs), and real estate investment trusts (
REITs). What sets Freetrade apart from other online brokerage platforms is that it is available on both Android and iOS apps, enabling users to trade on the go.
Freetrade operates on a freemium business model, which means that the basic version of the app is free, but users can upgrade to a monthly subscription offer that grants them access to additional features.
How Freetrade Works
As previously mentioned, Freetrade provides users with the ability to buy and sell various financial assets. Let’s take a closer look at the types of financial assets available on Freetrade.
Stocks
Freetrade allows users to buy and sell shares in individual companies listed on a variety of stock exchanges, including the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE). Users can navigate through the app’s interface to access the latest information about each company, including company financials and analyst ratings.
ETFs
Exchange-traded funds (
ETFs) are investment funds that are traded on stock exchanges, much like stocks. They provide users with access to a diversified range of assets, such as stocks, bonds, and commodities.
Freetrade provides users with access to a wide range of
ETFs, including those that track specific markets, sectors, and industries.
Trusts
Investment trusts are closed-end funds that pool together capital from multiple investors. These funds invest in a diversified range of assets, such as stocks, bonds, and property.
Investing in trusts can provide users with exposure to a wider range of assets than buying individual stocks. Freetrade provides users with access to a selection of investment trusts.
SPACs
Special purpose acquisition companies (
SPACs) are companies created specifically to raise money through an initial public offering (IPO) for the purpose of acquiring a privately held company. Investing in
SPACs can be risky, as the underlying company that will eventually be acquired is unknown.
Freetrade provides users with access to a variety of
SPACs.
REITs
Real estate investment trusts (
REITs) are companies that own and operate income-generating real estate properties. Investing in
REITs can provide users with exposure to the real estate market without having to own property.
Freetrade provides users with access to a selection of
REITs.
Features of Freetrade
Individual Savings Accounts (ISAs)
Freetrade provides users with the ability to save and invest in tax-efficient individual savings accounts (ISAs). These accounts allow individuals to invest up to a certain amount each tax year without having to pay tax on any gains made from investments within the ISA.
Tax-efficient Pension Savings Accounts (SIPPs)
Freetrade also provides users with the ability to save for retirement in tax-efficient pension savings accounts (SIPPs). These accounts allow individuals to invest in a wide range of assets with tax benefits.
Knowledge Base
Freetrade provides users with a comprehensive knowledge base that contains articles and guides that help users understand the various financial products available and how to use the app’s features.
Protection of User Assets
Freetrade holds user funds and assets in a segregated account, ensuring that they are protected in the unlikely event of Freetrade going bankrupt.
Conclusion
Freetrade is an innovative online brokerage platform that provides users with access to a wide range of financial assets and features. Its unique freemium business model and availability on Android and iOS apps make it an interesting choice for investors.
The ability to trade in individual savings accounts (ISAs) and tax-efficient pension savings accounts (SIPPs), a comprehensive knowledge base, and the protection of user assets are some of the specialized features of Freetrade that set it apart from its competitors.
Freetrade Company History
Freetrade, a London-based online brokerage, was founded in 2016 by four friends, Adam Dodds, Andre Mohamed, Davide Fioranelli, and Viktor Nebehaj. The founders’ background covered experience in financial institutions as well as tech behemoths like Google.
Their belief in making trading and investing accessible to everyone led them to create a platform that could democratize access to the financial markets.
Crowdfunding and Early Funding Rounds
Freetrade’s first beta version was released in 2017, and the waiting list rapidly swelled to over 50,000 signed-up users with an interest in the offering. Crowdcude, a crowdfunding platform, helped Freetrade raise its first 1 million in funding from 4,300 investors.
Soon after, it secured an additional 3.5 million from institutional investors like the Global Founders Capital, that included TransferWise’s co-founder Taavet Hinrikus, and Revolut’s CEO, Nikolay Storonsky.
Record-Breaking Crowdfunding and Institutional Funding
In 2018, Freetrade broke the Crowdcube-based crowdfunding record, raising more than 3.9 million within four hours, lower than the previous record-holder Revoluts 3.8 million amount. Trustpilot, the online review community enterprise co-founder, along with Draper Esprit, one of UK-based asset management firms, saved a combined 5.3 million of the institutional funds raised.
The momentum continued, and towards the end of 2020, the company raised 50 million in institutional funding, providing a significant boost to the companys plans to expand into Europe. To date, Freetrade has raised 88 million and attracted over 600,000 investors to join the platform, which has now surpassed Robinhood, its US-based peer, in terms of registered investors on their respective platforms.
How Does Freetrade Make Money? Freetrade has a transparent and straightforward approach to making money, which includes three key areas: subscriptions, currency conversions, and interest on cash.
Subscription
Freetrade offers its basic service for free, which allows users to invest in stocks,
ETFs, trusts,
REITs, and
SPACs without incurring trading fees. However, Freetrade charges a monthly fee of 9.99 for premium accounts, called Freetrade Plus, which provides priority customer service and several useful features, including limit orders, stop losses, and an advanced trading experience.
Currency Conversion Fee
Freetrade users wishing to trade stocks or
ETFs denominated in currencies other than British pounds (GBP) have to pay a currency conversion fee of 0.45%. This percentage includes the charges that Freetrade’s exclusive forex exchange partner levies on such transactions.
It is worth noting that this is a lower rate than other similar online brokerage firms.
Interest on Cash
Freetrade Plus users have access to an additional benefit, which includes a monthly interest on their cash balance held on the platform. This incentive works similarly to a savings account and earns an interest rate of up to 0.45%, depending on the monetary amount held.
As with most online brokerage platforms, Freetrade achieves this by lending out the money users deposit into their accounts to financial institutions at higher interest rates.
Conclusion (not included)
Freetrade is a revolutionary platform that is delivering access to financial markets for everyone. The company was founded by experienced financial and tech professionals who shared the common goal of making trading and investing more accessible to retail customers, moving away from the traditional personas of bankers and brokers controlling the industry.
Freetrade makes money through a transparent subscription model, currency conversion fees, and interest on cash balances that encourage users to maintain liquidity on the platform and help the company grow its user base while providing a valuable service. With continued funding and support, Freetrade is set to revolutionize the online brokerage landscape.
Freetrade Funding, Revenue & Valuation
Venture Capital Funding and Investors
Freetrade has attracted significant investment since its inception. The company had its first funding round in August 2017, raising 1 million in a seed round.
This funding was secured via crowdfunding platform, Crowdcude, and saw 4,300 investors invest in the company. In April 2018, Freetrade then raised an additional 3.2 million in a Seed 2 round led by Draper Esprit, to help accelerate growth and expand the team.
Over the years, Freetrade has also attracted support from various venture capitalists, including Left Lane Capital, L Catterton, and Daintree.VC. In 2019, the company raised $15 million in a Series A funding round led by Atomico.
This funding was used to accelerate growth and prioritize continued investment in the product. Freetrade’s next funding round in 2020 raised an additional $35 million in a Series B round, which was led by Draper Esprit, a London-based asset management firm.
Other investors included L Catterton, Left Lane Capital, and Daintree.VC. Freetrade’s most recent funding round took place in March 2021, when it raised $69 million in a funding round led by Left Lane Capital, a New York-based investment firm.
The latest funding will support Freetrade’s expansion into European markets and improve the platform’s features.
Valuation and Revenue
In 2020, TechCrunch reported that Freetrade had increased its valuation to $366 million following its Series B funding round, up from $140 million in 2019. These figures indicate the company’s consistent growth and its ability to attract significant investment.
With respect to revenue, Freetrade generated annualized revenue of more than $1.4 million in 2020, which represented a vast increase from the previous year. Keeping in mind that the company has a freemium business model, where most of its core services are not subject to fees, the revenue serves as an indication of the effectiveness and popularity of the platform’s premium services such as Freetrade Plus.
Conclusion
Overall, Freetrade’s funding, revenue, and valuation trends suggest that the online brokerage company has been experiencing rapid growth and investment. The company’s freemium model attracts users and incentivizes them to contribute to increased revenue through value-added premium services offerings.
Freetrade’s ongoing investment in the product continues to add new features, expand into new markets, and grow its customer base, providing a solid foundation to secure future growth and success. Freetrade has emerged as a significant player in the fintech industry, offering a user-friendly and accessible platform for trading and investing.
With backing from venture capitalists such as Draper Esprit and Left Lane Capital, Freetrade has secured substantial funding rounds and achieved an impressive valuation of $366 million. Despite its freemium model, the company has generated considerable revenue, signaling the success of its premium services.
The remarkable growth of Freetrade underscores the increasing demand for accessible investing platforms and the potential for disruption in the traditional brokerage industry. As Freetrade continues to expand and innovate, it remains a key player to watch in the evolving landscape of online investing.