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Help us on our mission to get everyone investing. When you invest, your capital is at risk.
Remember that investing in early stage, private companies carries significant risk.
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*based on an average of monthly orders executed between July 2021 and July 2022.
Why is Freetrade raising?
Freetrade has crowdfunded every year since 2016, with over 17,000 people joining the investor community.
Crowdfunding has helped fuel our growth, and the community has also played a profound role in shaping the product and spreading the word.
The funds from this round will be used to develop new features and to support our push into Europe with our launch in Sweden and beyond.
What’s different about this round?
Since we last raised through Crowdcube in November 2021, we’ve strengthened our balance sheet with £30m in the form of a convertible loan note from existing and new investors.
For round eight, we’re opening up the opportunity for crowdfunding investors to participate in the convertible loan note on the same terms as we offered to our institutional investors earlier this year.
To learn a bit more about this type of investment, you can read more here.
Just remember that investing in startups carries significant risk, including illiquidity, lack of dividends, loss of investment and dilution. Before investing, you can read more about these risks on the Crowdcube website.
What is a convertible loan note?
A convertible loan note (or “CLN” for short) is an investment for equity in a company where the shares will be issued at a later date. The terms and conditions for conversion determine the valuation at which your investment converts into shares.
Why are you raising a convertible loan note and not equity?
By raising a CLN now, we don’t have to put a valuation on the company. Since we last raised on Crowdcube at the height of the bull market, our public market peers have seen significant declines in their valuation, which would imply that we would raise at a similar discount, despite the fact that our business has continued to develop and strengthen.
When will they turn into shares?
There are a couple of scenarios in which we will convert your investment into shares:
– If we raise a “significant” funding round (like a Series C)
– To maintain sufficient regulatory capital
– If we sell the business
– Or if twelve months elapse
Please remember that investing in startups carries significant risk, including an inability to sell shares on an open market (illiquidity), lack of dividends, loss of investment and dilution.
What is the share price and valuation?
If the CLN converts because of a fundraise or sale, your investment converts either at a 20% discount to the valuation of that round or a pre-money valuation of £400m (whichever is lower).
In all other cases, your investment converts at our Series B share price of £3.77.
What type of shares will I receive on conversion?
Freetrade is opening investment in multiple convertible loan notes during this round.
The shares that you receive on conversion will depend on the loan note that you're investing in. This will be made clear on Crowdcube. We will open up investment in each loan note in order, filling up the first before moving on to the second.
Investors in the first loan note will receive Series B preference shares (or Series C preference shares if they convert as a result of a Series C funding round).
Investors in the second note will receive Series A preference shares.
What are preferred shares?
Preferred shares are typically issued to institutional investors and provide certain additional benefits that ordinary shares do not have.
In the unlikely event that Freetrade were to cease operating, i.e. on a liquidation, or in the event of any other return of capital, Series A and B Preferred shareholders and A Ordinary shareholders rank alongside each other. However, in the event of a sale, Series A and Series B Preferred shareholders may together rank ahead of the A Ordinary shares.
How do I actually invest?
To invest in the Freetrade crowdfunding, you must sign up to Crowdcube.
Once you’ve signed up and the Freetrade crowdfunding round has opened, you’ll be able to invest. Your money will not be taken until the round has officially closed and the cooling-off period has ended.
When do I get charged for my investment?
Once the pitch has closed to further investment, you will receive a cooling off email, which includes a copy of Freetrade's articles of association for you to review.
During this cooling off period, which is generally no shorter than seven days, you’ll have the opportunity to review your investment before it becomes final. Once this cooling-off period has expired, Crowdcube will send you an email confirming when your payment, which includes your investment and Crowdcube’s investment fee, will be collected.
How do I go about getting my money out if I invest?
Investing through Crowdcube is not the same as buying shares in a publicly-traded company like Lloyds or Tesla on the Freetrade app. Freetrade is a private company (read more about who owns Freetrade). That means any shares you acquire via Crowdcube cannot be bought and sold on a stock exchange at this time.
If, in the future, Freetrade was to go public or be acquired by another company, you could receive money for your shares or be able to sell them on an exchange. For now, while it is possible to sell your shareholding if you find a buyer, you should bear in mind that there are restrictions on transfers and there is no active secondary market for Freetrade shares.
Will the round be eligible for EIS?
Due to HMRC limits, this round will not be eligible for EIS.
Investing in start-ups and early-stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. Investment opportunities are not offers to the public and investors must be eligible Crowdcube members. This is a marketing communication that has been approved by Crowdcube, a crowdfunding service provider authorised and regulated by the Financial Conduct Authority (FCA) and the Comisión Nacional del Mercado de Valores (CNMV) and sent on behalf of Crowdcube by Freetrade Ltd.