Commissions have traditionally been synonymous with investing in the stock market, but Freetrade, which is regulated and authorized by the FCA, applies a freemium subscription model to its robust mobile app that allows people to invest in the stock market. Over 70,000 customers, many of whom are millennials, use Freetrade and love its simplicity, ease of use, and highly active community forum. The forum lets users interact with Freetrade developers to give feedback about the app, chat about investing with other community members, and learn more about investing.
London TechWatch spoke with Freetrade Founder and CEO Adam Dodds to learn more about his plans for FreeTrade, after its latest funding round, which brings the total funding amount to £20.6M across six rounds.
Who were your investors and how much did you raise?
We’ve raised over $20M since 2016, starting with very successful crowdfunding campaigns. Our round in April this year crashed Crowdcube, as we raised £1M in just 77 seconds which was the fastest ever million-pound raise on the site. We also recently had our first VC investment from Draper Esprit who completed our recent $15M Series A.
Tell us about the product or service Freetrade offers.
Freetrade is a challenger stockbroker, offering access to invest in the markets with zero fees. Our mission is to make investing accessible to everyone. As a tech company, we’re building a modern, serverless tech stack which has enabled us to scale to over 70,000 customers today.
What inspired you to start the company?
Freetrade was born from my frustration of not finding a modern, simple app for long-term investing in the UK. I knew that the exorbitant fees of the traditional providers, between £5-12 per transaction, didn’t have to be the norm, and so I decided to start Freetrade. In the process, we’ve become FCA-regulated, FSCS-secured and a member of the London Stock Exchange.
We’re focusing on doing one thing really well: investing in the stock market. Our tech stack means we can offer trades for zero commission, and we’ll also add exciting new features like fractional shares, which will be on the app in early 2020. Overall, transparency is a big differentiator between us and the legacy stockbrokers, not only in terms of fees but also in how we place customer service and community at the heart of everything we do. Our community forum is one of the most active in fintech, and we talk to our customers every day to get feedback and feature requests. The forum is also a great place to learn about investing and chat with other investors. We build a product with trust at its core.
What market are you targeting and how big is it?
There are over 100M Millennials in Europe, and the vast majority are not yet putting their money in investments on the stock market. This market is huge, and we’ve seen explosive demand so far in our launch market of the UK with over 70,000 customers on our app. The majority of this generation has never invested before, so we’re the first service they’ve used, although we’re now seeing many investors move over to us from legacy stockbrokers now that we’ve launched our ISA transfer service.
Who do you consider to be your main competitors?
There are other stockbrokers out there, but we believe we’re building the best product with trust and transparency at its core. Perhaps our biggest competition is actually our target market ‘not investing’, the notion that it’s too complicated or boring. This is why education will be a big part of our content marketing strategy in 2020.
What’s your business model?
We have a freemium pricing model: the Basic Account and features will be free, forever, so anyone can sign up and make a trade with no commissions. We also have paid-for features like the ISA and soon the Alpha Account which will have some additional features. From our research – and many conversations over the last few years – we can see that millennials want a simple, intuitive mobile app with a clear free structure, and they’re used to freemium pricing on other apps they use.
What was the funding process like?
Crowdfunding was extremely busy and exciting for us. From our first round of £170,000 to the last round where we raised £4M in a few days, our community has backed us not only financially but by spreading the word. We have thousands of ambassadors and they are our greatest assets!
What are the biggest challenges that you faced while raising capital?
Time. Juggling calls and emails and also time zones. Also, good to keep in mind: it’s long-term relationship building.
What factors about your business led your investors to write the check?
The size of the opportunity ahead of us is clear: over 100M millennials in Europe, most of them underserved by investing apps. We have the ingredients to be one of the handful of products that will transform how financial services look like in the next few years.
What are the milestones you plan to achieve in the next six months?
We’ll release some big new features early in 2020 thanks to the completion of the work on our new tech platform which we call Invest by Freetrade. They will include fractional shares for US, UK and European shares, we are on track to be the first company to launch this. We’ll also open our first EU office and launch in our first set of new countries, Ireland, Netherlands, France and Spain. And we plan to continue expanding our team, so check out our careers page if it sounds exciting.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Before you do anything, focus on product/market fit, everything else will follow. If you hustle hard enough.
Where do you see the company going now over the near term?
Customer growth and European expansion. We’re growing fast and intend to keep up the pace in 2020.
What is your favourite restaurant in London?
Rudie’s Jerk Shack at Boxpark. I lived in the Caymans, and not a lot of Caribbean places in London are authentic enough for me, but this is one I’d recommend.