Freetrade’s chief executive Viktor Nebehaj has fuelled the anger of crowd funding investors after the trading platform was bought by IG Group on Thursday.
On a Freetrade forum, Nebehej posted: ‘I appreciate that for many of you who backed us after our Series B this means that your investment is being realised at a loss.’
He added: ‘I’m personally grateful for all of our crowdfunders’ backing. I appreciate these words may offer more or less comfort for some, depending on their investment return.’
Under the acquisition deal Freetrade investors will receive up to 119 pence per share, meaning many of the firm’s crowdfunders will make a loss on their investment.
IG is set to pay £160million to acquire Freetrade, a fact that is not lost on some everyday investors who backed Freetrade when it had a valuation of £650million in 2021.
One Freetrade crowdfunder, DrPigeon, replied to Nebehej’s post stating: ‘Thank you, I’m making a loss of £5,335.42 on my investment of £7,015.20.’
Fueling the fire: Freetrade chief executive Viktor Nebehej told investors he was grateful for their support
Another, Billybunter1, said: ‘I feel absolutely devastated about this. I first invested in 2019 and almost 6 years later my £10,000 investment is worth 6000 shares at approximately £7,000.’
‘I’m getting about 10 per cent of what I invested,’ investor Vimfuego posted on the forum, ‘someone’s sat somewhere laughing at us.’
The platform has conducted several investing rounds, selling shares on Crowdcube for £9.25 at its peak valuation. In 2023 the firm sold shares for £2.60 each. Both fundraises smashed their £1million targets.
However, later in 2023 Freetrade saw its valuation slump to £225million, though Thursday’s deal significantly undercuts even this.
Following the acquisition IG said Nebehaj will remain at the head of the firm alongside the rest of the leadership team.
Forum poster Kazamx said: ‘Just a happy coincidence you became a millionaire in the process.’
Separately, a number of Freetrade investors contacted This is Money directly.
‘When the crowd funding opportunity came along (via Crowdcube) I thought it would be sensible to ‘back the company you like’ as I was told this is how you buy shares. I had an inheritance of £1,000 available, so put the whole lot into Freetrade,’ one reader, James, whose name has been changed, wrote in.
James said his research suggested Freetrade’s shares would go up, especially with an IPO on the cards.
He said: ‘I was disheartened and crushed to read that my shares are to be sold, and Freetrade is to be swallowed up by a larger company.
‘At an offer of £1.19 before charges, I stand to lose about 90 per cent of my inheritance/investment.
‘Yet the two founders of the company, are still to run Freetrade, and no doubt will profit from the merger.
‘The acorns that us early adopters helped to plant have grown, and we have been trodden on.’
‘It’s sickening, as it’s money I cannot afford to have lost. Such a bad taste has been left.’
In his forum post Nebehej promised that the takeover by IG is ‘going to give us the foundations to grow, seriously compete in the investment platform market, and build a fintech out of the UK with strong and consistent backing.’
For small time crowdfunding investors though, this means sacrificing the hard earned cash that they committed to help grow a company they believed in – one that they now feel has sold them down the river at the first chance of making an easy buck.
As one investor, Ravi.Ramireddy, put it to Nebehej: ‘The deal is helping you and few big investors. You have ruined many of us, shame on you.’
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