Crowdfunding investors in UK startup Freetrade will see a financial return after the commission-free trading app was today acquired by the listed trading platform and spread betting group IG Group in a £160M deal.
Freetrade, founded in 2016, is one of several mobile trading apps, along with Robinhood, which have become popular with millennials in recent times.
The newer entrants, offering mobile-friendly technology and commission-free trading, have looked to wrest market share from traditional investment companies like Hargreaves Lansdown.
FTSE-250 listed IG Group said Freetrade would strengthen its UK trading and investment offering and open it up to new customers while Freetrade said the deal would speed up its growth.
Freetrade, which boasts 720,000 customers and £2.5bn in assets, will continue to operate as a standalone brand following the deal, which is expected to be completed by mid-2025.
The UK startup has been heavily invested in through crowdfunding raises, raising nearly £30m through crowdfunding platform Crowdcube, so those investors will see a return on their investments.
According to fintech analyst Seb Johnson, Freetrade A Ordinary share and B Investment shareholders will receive £1.19 per share; Series B1 shareholders will receive £2.08 per share; and Series B3 shareholders will receive £2.60 per share.
Freetrade’s valuation rose to £650m in 2021 during the pandemic but was slashed by 65 per cent to £225m in a 2023 crowdfunding round.
The startup reported its first-ever half-year profit in 2024, with adjusted operating profit of £91,000.
Breon Corcoran, CEO of IG, said:
"This is a rare opportunity to strengthen IG's UK trading and investments offering and broaden our target addressable market.
"Freetrade is one of the most successful emerging players in the UK direct-to-customer investment market, with a strong brand, highly scalable technology and delivering rapid growth. I am delighted that Viktor and his team will join IG and continue to lead Freetrade."
Viktor Nebehaj, CEO and co-founder of Freetrade said:
"This is an exciting opportunity to accelerate our growth and delivery of new products and features on our award-winning platform.
"IG's vision for Freetrade is closely aligned with our own and its backing will be of huge benefit as we continue to scale the business."
"We are delighted to have provided the opportunity to investors to back Freetrade right from the very start of the business in 2016. At Crowdcube, we have always been driven to give retail investors the chance to invest in and back companies that excite them, even in their very earliest days."More than eight years on from our first Freetrade investment opportunity, we are now equally delighted to provide positive cash returns to many thousands of investors, particularly to those who backed the business at the start of its journey, some of whom will receive returns of up to 15x their original investment."
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