Freetrade: a 72% cut in price, and the share classes that got their money back

The problem

In November 2021 Freetrade's customers paid £9.2499 a share in a crowd round at a stated £650m pre-money valuation.^1,2,14 Seven months earlier, institutions had paid £3.7711 a share for the Series B.^15,16 The crowd price was 2.45 times the institutional one, on our calculation.

Then the market turned. The Financial Times reported that term sheets Freetrade had signed at £700m were scrapped in January 2022.² In the year to September 2022 it lost £39.7m.⁶ It had a solvent wind-down plan that would start if capital and liquidity fell below £7.9m and £10.3m.⁶ Deloitte, its auditor, reported a material uncertainty related to going concern.⁶

What followed was a run of instruments, each converting at its own price, then a down round and a sale. Every price is on the record at Companies House. We convert sterling at $1.25 to the pound for every date: the top of the range CNBC used in its own conversions in 2024 and 2025, $1.22 to $1.25.^17,18

The company

Freetrade is a commission-free investment app for UK retail investors. It earns from subscriptions, foreign-exchange fees and interest on customer cash.^19,10 Adam Dodds, Davide Fioranelli and Viktor Nebehaj co-founded it in 2016, and it launched in 2018.^20,21

Revenue was £12.7m in the year to September 2021.⁶ It reached £28.1m in 2024, when operating cash flow turned positive.¹³ Headcount peaked at just over 300 in March 2022 and was 184 by September, after redundancies.⁶ IG put customers at 720,000 and assets under administration at £2.5bn at the end of 2024.¹⁰

The rounds and prices

The Series B was announced on 23 March 2021 as $69m, led by Left Lane Capital with L Catterton and Draper Esprit, now Molten Ventures.^22,21 TechCrunch reported a $366m post-money valuation.²² The new shares, issued at £3.7711, come to £35.0m on our arithmetic.^15,16 We found no statement of how the $69m splits between new and existing shares.

The seventh crowd round opened on 24 November 2021.²³ It raised £8.0m from 6,869 investors in non-voting B Investment shares.^6,1 Dodds later told crowd shareholders that the failed £700m valuation "represented a c. 30x multiple on our annualized revenue run-rate".²

Stated valuations are the company's or the press's. The rest is our calculation on issued shares, which leaves out options.

Sources: Companies House;^{24,16,1,5,25,7,13,26} TechCrunch;²² Finance Magnates;^2,8 IG Group.¹⁰

By our arithmetic, £2.60 was 0.28 times the November 2021 crowd price and 0.69 times the Series B price.

The notes and how each converted

Three convertible instruments and the August 2023 equity brought in about £38.8m (about $48.5m), on our arithmetic.^6,19

The institutional note: £29.3m at the 2021 price

In January 2022 Left Lane and Molten, the two main institutional shareholders, led a £29.3m convertible loan note, with The Phoenix and Capricorn Capital Group as new investors.⁶ Dodds said the company "didn't price the round on purpose", citing "choppy markets".²⁷ The note carried no interest and no obligation to deliver cash, and was booked as equity.⁶

It converted in three tranches at a fixed £3.7711: £7.0m in June 2022, £9.0m in October 2022 and £13.325m in February 2023.^6,19 That is 7,776,232 Series B shares in all, on our arithmetic from the share returns.^3,4,5 The price was 59% below the crowd's £9.2499. We do not know why the note converted early, or whether it had a cap, a discount or a maturity.

Each holder's B2 shares, described below, are a fixed fraction of its note. On that basis The Phoenix held about £18.0m, 61% of the note (our calculation).⁹ Left Lane and Esprit Nominees, by its name Molten's nominee, held £5.0m each, which matches the FT's report.²

The crowd note: a 20% discount

The eighth crowd round, announced on 8 September 2022, offered a note "on the same terms as the institutional investors", in the company's words as summarised.^28,29 The Telegraph reported a conversion "either at a £400m valuation or at a 20pc discount to the future funding round, whichever is lower".³⁰ We read that report only in search excerpts.

On 21 August 2023 a principal of £2,104,410 converted into 1,011,927 Series B1 shares.¹⁹ That is £2.08 a share, 80% of the £2.60 round price, on our arithmetic, and the B1 issue price in the Articles.³¹ The accounts call it "a fixed conversion price of £2.60"; the share numbers say £2.08, and we treat £2.08 as correct.¹⁹

The bridge: half a note, half a loan with a 4x premium

On 18 January 2023 Freetrade signed for "up to £6.0 million" in a loan agreement and a convertible note.⁶ It raised £5,107,000 from existing investors led by Left Lane and Molten, split equally between the two.¹⁹ Nine days later the directors approved the 2022 accounts with their going-concern paragraph.⁶

The note half, £2,533,500, converted into 1,227,629 Series B1 shares: about £2.06 a share on our arithmetic.¹⁹ We could not find why it was slightly below £2.08.

The loan half, also £2,533,500, was "non-interest bearing and only repayable, along with the redemption premium of four times the principal amount, if the Board approves a liquidity event".^19,13

The B2 shares and what they did

On 21 August 2023 the company allotted 3,502,607 Series B2 shares at £0.0000001 each, their nominal value.^7,31 The accounts say only that the allotments "related to the conversion of convertible loan notes".¹⁹ Neither document says what the B2 shares were for.

The arithmetic does. £29,325,000 at £2.60 a share buys 11,278,846 shares. The noteholders had received 7,776,232. The difference is 3,502,614, seven more than were issued, which per-holder rounding would explain. All of that is our calculation.

The register confirms it. Each Phoenix entity's B2 holding is 45.04% of its Series B holding, and £3.7711 divided by £2.60, less one, is 45.04%.⁹ Holders that also owned 2021 Series B shares received B2 only on their note shares. Nobody else holds B2.⁹

Our reading is that the institutional note had full protection against a lower next round. It converted early at the 2021 price, and when the next round came in lower its holders were topped up to that price. They did not get the 20% discount the crowd and bridge notes received. This is an inference from the arithmetic: we have not seen the subscription agreement the Articles refer to, or any public statement of the term.³¹

So in August 2023, on our arithmetic, the institutional noteholders stood at £2.60 a share, the other noteholders at about £2.08, the 2021 Series B at £3.7711 and the 2021 crowd at £9.2499.

The preference stack at the sale

Article 6.1(b) of the 2023 Articles, repeated in 2025, pays the preferred shares first.^31,32 Each takes "the higher of (1) the Issue Price for that Preferred Share and (2)" its pro-rata share of the proceeds.³¹ That is a 1x non-participating preference.

The issue prices are £0.956004 for Series A, £3.7711 for Series B, £2.08 for B1, nominal value for B2 and £2.60 for B3.³¹ The A Ordinary and B Investment shares carry no preference and take what remains, including every crowd share bought at £9.2499.³¹ In 2021 the preference also applied on a liquidation; since 2023 a liquidation is shared pari passu.^33,31 A sale below £7.54 a share needed the consent of the "Series B Majority", which had to include Left Lane.³¹

From the most senior claim to the least, the stack ran like this. The bridge loan came first on our reading, because it was a loan repayable with its premium on a sale.¹⁹ Then the preferred classes, each taking the higher of its issue price and its pro-rata share. Then the A Ordinary and B Investment shares.

Last came 2,665,719 growth shares, allotted in December 2021 at £0.07 and paid only above hurdles.^34,31 At the sale they became Deferred shares and were bought back for £0.01 per holder.^11,35 The Review draws a stack the other way up, most junior at the top.

Who got what on the sale

IG Group agreed on 16 January 2025 to buy Freetrade "for an enterprise value of £160 million", in cash.¹⁰ The sale completed on 1 April 2025 and "valued the entire ordinary share capital of Freetrade at £171.6 million" (about $215m).¹³ £160m was 29% below the £225m of 2023.¹⁸ Over the 84,157,083 shares in issue, £171.6m is £2.04 a share on average (our calculation).²⁶

The press reported estimates of the payout by class before completion.¹²

Sources: Nuts About Money's estimates;¹² the 2025 accounts for the bridge loan.¹¹

The B1 and B3 figures are exactly their issue prices, as Article 6.1(b) provides when the pro-rata amount is lower.³¹ Sharecast reported the deal was worth up to 119p a share to Freetrade investors.³⁶

The 2025 accounts put the bridge loan's redemption premium at £10.2m. The buyer settled it and the transaction costs on the company's behalf, as a capital contribution.¹¹ With the principal, the lenders received about £12.7m (about $15.9m) on £2.5m: about 5x, on our arithmetic.

Molten Ventures announced proceeds of £20.4m, a 1.5x return on its invested capital.³⁷

The reported figures do not add up. Suppose Series B received its £3.7711 issue price, B1 £2.08, B3 £2.60 and every other share £1.19. The total is £146.2m on our calculation: £25m (about $31m) short of the £171.6m in the accounts.

We cannot close the gap without the sale documents. Sharecast, reporting Sky News, said transaction fees would be deducted from shareholders' proceeds.³⁶ The "up to" in the 119p estimate, or a different Series B payout, could explain part of it. We do not know which.

What we do not know

• The terms of the 2022 institutional note: any cap, discount or maturity, why it converted early, and the term behind the B2 shares, which is our inference.
• Why the bridge note converted at about £2.06, not £2.08.
• How the $69m Series B splits between new shares and any secondary sales.
• What the Series B and B2 shares received at the sale, what was deducted, and why the reported payouts fall £25m short.
• The fully diluted share count at each round.
• Who advised Freetrade. Freshfields advised IG.³⁸
• Why each investor accepted each price. We found no statement from Left Lane, L Catterton, The Phoenix or Capricorn on the 2022 to 2023 terms.

What a founder can take from it

The questions this case answers are the ones founders keep asking us. What valuation can I defend? Should I take a bridge now or raise the full round? What happens when the price has to come down?

A high last price becomes a liability. On our calculation the £650m crowd valuation was 51 times revenue for the year to September 2021.⁶ The August 2023 price was about 10 times the £21.6m of unaudited 2023 revenue.¹⁹ IG paid 5.7 times audited 2024 revenue.¹³ The multiple fell faster than the business grew.

Our view is that the price you can defend is the one an institution will lead at, in the market you will raise in next. Freetrade's crowd price sat above that, and it did not hold. Every later instrument was measured against it, and the shares bought at £9.2499 carried the fall.

Notes and bridges protect their holders. Freetrade shows three ways. A discount: the crowd and bridge notes converted 20% below the round. Price protection, on our inference: the institutional note was topped up to the round price. A return multiple: the bridge loan's premium of four times its principal.

Each protection is paid for by the holders who lack it. The B2 shares diluted every other class, and the £10.2m premium was paid to the bridge lenders at the sale.¹¹ In our view a bridge without a price postpones the argument about value, and its terms decide in advance who loses it.

So, bridge or full round? We think a bridge suits a company whose next price is likely to be higher. When it may be lower, its terms set how the fall is shared, so price them as if it will be.

A 1x non-participating preference decides a low exit. Take an illustration of our own. A company has 100m shares, of which 20m are preferred, bought at £3.00 each. Each preferred share takes the higher of £3.00 and its pro-rata share.

Above £300m the preference does nothing. Below it, the shortfall falls on the ordinary shares: at £100m they get a sixth of what they would at £300m.

Freetrade sold below its line. On our arithmetic the Series B preference stops binding only above about £317m of equity value, £3.7711 on every share in issue. The equity was valued at £171.6m.¹³ That is why B Investment and B3 shares, bought on the same day at £2.60, were reported at £1.19 and £2.60.¹²

What to negotiate in a bridge. These are our views, from this case.

• The conversion price and every way it can move. A fixed price, a cap, a discount and a top-up give different results at the same next round. Model each at the round you fear.
• Any top-up, in writing, with the number of shares it would issue at three prices. Freetrade's came to 3,502,607 shares.⁷
• Any multiple on a sale. A 4x premium on £2.5m cost £10.2m.¹¹ Ask for it to fall away after a date.
• The class the notes convert into. Freetrade's B1 shares carried a preference; the B Investment shares issued that day did not.³¹
• Who can block a sale, and below what price.

A bridge buys time. Its terms decide who pays for it.

Cite as: “Freetrade: a 72% cut in price, and the share classes that got their money back”, Norvian Review, 30 September 2026.