eToro, a London headquartered fintech, recently completed a $250 million funding round at a valuation of $3.5 billion.
Investors in the round include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures, and a number of existing investors. This funding stems from an Advance Investment Agreement (AIA) which eToro entered into in February 2021 as part of its proposed SPAC transaction.
Ken Smythe, founder and CEO of Next Round Capital Partners told TechCrunch an AIA is an agreement where an investor (or investors in this case) pay in advance for shares that will be allocated at a later date, sometimes at a discount.
“As Q1 progresses, I’m hopeful that Yale Hirsch’s market theory ‘as goes January, so goes the year’ holds true. We’ve seen a positive start to the year with markets reacting favourably to ‘less bad’ news and retail trading hitting an all time high. Year to date, we have seen an improvement in total commissions and profitability compared with the previous quarter with higher engagement and trading activity from our users," says eToro founder and CEO, Yoni Assia.
The funding round was revealed as the social investing network announced its 2022 figures - noting highlights of the year as $631 million in total commissions which breaks down to 48% equities, 27% commodities, 19% cryptoassets, and 6% currencies. Funded accounts as of December 31, 2022 were 2.8 million.
“At eToro we need no reminder that markets are cyclical. The diversified nature of our multi-asset product offering ensured that commissions from equities and commodities partially offset the decrease in commissions from cryptoassets in 2022. It’s also worth noting that we were not impacted by the liquidity concerns which plagued many in the crypto industry. Our underlying business is profitable and our balance sheet is strong," says Meron Shani, eToro CFO.
“Total commissions for 2022 were $631 million, down versus our stellar performance in 2021, yet up 5% versus 2020. We continued to grow our user base despite more negative market sentiment and a reduction in our marketing spend. We ended the year with over 2.8 million funded accounts (up 17% YoY)," he adds.
In Autumn 2022 eToro acquired Lisbon-based Bullsheet, a provider of portfolio management tools designed exclusively for eToro users.
“I am very proud of the success with which we navigated 2022, continuing to grow our user base and enhance our product offering. Our 2023-2025 strategy focuses on scaling our brokerage business in our key markets and increasing profitability via revenue growth and cost management," says Assia.
“Last year, retail investors endured a tumultuous year and for many their first ever bear market. Yet our latest quarterly Retail Investor Beat survey supports the activity we see on our platform – the retail investor is resilient. While their short-term tactics may change in response to the market environment, they remain committed to their long term goals. eToro will continue to focus on profitable growth while helping to drive progress towards a world where everyone can invest in a simple and transparent way," he adds.
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