Freetrade, a leading British trading company, has struggled to raise funds as venture capitalists worry about the fintech industry. As a result, the company decided to turn to existing shareholders to fund its growth.
According to the Financial Times, Freetrade was seeking to raise funds at a 700 million pound valuation. While most investors were ready to invest in the company, there were concerns that the valuation appeared expensive.
The situation was made worse by the performance of fintech companies. For example, shares of publicly traded fintech companies like Wise, PayPal, and Affirm have crashed by more than 50% from their highest point in 2021. Companies in the sector like Coinbase and Robinhood have also seen their shares crash.
Privately funded fintech firms are also struggling. For example, Klarna saw its total valuation slip from over $46 billion to about $6.7 billion.
As a result, to stay afloat, Freetrade said that it had raised 30 million pounds in convertible loan from existing backers. In the previous funding round, the company was valued at over 650 million pounds.
Freetrade has made some adjustments to adapt to the changing conditions. For example, it has laid off about 15% of its staff and lowered its marketing budget. Its goal is to reduce its cash burn to 1 million pounds per month. Its assets under management rose to 1.3 billion pounds in August.