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Making stock investing more transparent and democratic: our investment in Freetrade

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Traditionally, buying and selling shares has been an expensive, time-consuming affair, used predominantly by people in their middle age or outsourced to advisors. Online stockbroking has therefore paid little attention to fees, user experience or a younger generation of potential customers. Fees of between £5 and £11 or more per trade are common, and multiple hidden charges are rife. A lack of competition has enabled incumbents to stand still. The promise of everyone being able to access public markets, and the potential wealth this creates, has therefore been restricted to a smaller, wealthy segment of the market.

It is not new to say that challenger companies are making waves within markets across the globe, providing simple and intuitive alternatives to everything from grabbing a taxi to transferring money, almost instantly, with a swipe on your smartphone. Public market investing is no different, and we are glad to see that there is a new market opening up with a few companies tackling this problem. Millennials want to build and manage their own future and invest in the companies they know and love.

Fintech is enabling new companies to destroy these fees and create amazing new user experiences in financial services, just as people start to become more interested in taking back control of their finances. As a major VC investor in fintech we are seeing this across all areas of banking, investing and insurance; we have been very fortunate to have been investors in Transferwise, Crowdcube, Revolut, N26 and others who all share this mission to put the customer back at the forefront.

Indeed, our very own mission is to open VC investing to all, with low fees and strong liquidity. We want people to be able to buy our shares easily and cheaply and have access to the fastest growing private technology companies in the UK and Europe.

Step in Freetrade

Freetrade is a challenger broker that is on a mission to change the face of trading and make stock investing appeal to every generation – especially millennials. With the mission of opening up investment opportunities, enabling everyone to invest for the long term, they are focused on making investing more transparent and more affordable.

Freetrade empowers its users to trade on a rapidly growing universe of global stocks, ETFS, and Investment trusts across the UK (and soon Europe) in an accessible, affordable, and seamless way. Where incumbents charge up to £12 per trade, Freetrade charges £0 for basic orders (executed at 4 pm) or just £1 for an instant order, removing the current barriers for entry as well as limiting hidden fees elsewhere.

They also have a pipeline of innovative products which we are excited about—the first with global fractional shares, for example, which enable you to buy a percentage of AMZN or TSLA, rather than fork out over $1000 each, mean they have been able to attract a younger cohort of users.

But it’s community that is the beacon of Freetrade. With over 700 new forum posts every week, and a user base that has grown by 300% in the past year, the company has developed a steadfast following that genuinely cares. The Freetradecommunity takes an active role in company growth; regularly suggesting improvements, voting on new features and inviting friends to join the fee-free movement.

And, this community has been investing in Freetrade from the beginning. In fact, they recently completed the fastest ever raise on our portfolio company Crowdcube, raising $1.2m in 77 seconds.

We are delighted to be joining the crowd and investing a further $7.5 million to support in this series A.* This round will be used to continue the growth of the engineering team, accelerate product rollout, expand to European markets and invest in customer growth.

We look forward to working with the team as they scale across Europe, democratizing access to investment opportunities as they go.

*Subject to FCA approval