A new fee-less stockbroker is crowdfunding fresh cash in a bid to challenge Robinhood

Freetrade

British fintech Freetrade, the UK’s answer to Robinhood, is set to raise £1 million ($1.3 million) in crowdfunding from its members on Thursday.
It’s the fee-free stockbroker’s fourth funding round to date with this latest financing going towards building its engineering teams as it looks to further break into the European market.
The company has 100,000 on its waiting list and says it’s growing at 12% per week.
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The UK’s answer to Robinhood has big plans.

Freetrade, a London app-based stockbroker, is riding on the coattails of US company Robinhood — the US zero-fee investing platform with more than 6 million users that CNBC says aims to disrupt banking and "become a millennial investor’s one-stop shop."

London-based Freetrade will launch crowdfunding on Thursday, looking to raise £1 million ($1.3 million), with the possibility of raising up to £4 million.

It’s the next step in what the company says is it’s 12%-per-week growth, saying it has 100,000 people on its waiting list after debuting late last year. It’s Freetrade’s fourth funding round to-date with no private equity or VC money involved — all of its financing is crowdfunded.

Fee-free stockbroking has exploded in the US with Robinhood — which looks set to IPO this year — gaining major support amongst millennials. Freetrade is looking to do the same in Europe. It’s latest funding will go towards building out its product offering, such as offering fractional shares of equities (buying, say, a £30 portion of a share of Facebook), and boosting its European presence, founder Adam Dodds told Business Insider in an interview.

"We’ve seen that our community is very keen to back the business," Dodds said. "We’ve relied on word of mouth so far but we want to spread the word louder and showcase our offering."

The company is also launching an "autopilot" feature described as being like a roboadvisor that can help maximise investments, and will hire additional engineers through the fundraising.

Freetrade operates on a model like those offered by companies such as Spotify. Customers are able to open an account free of charge and make trades but can pay more for quicker transaction speeds. The company currently offers 335 different investment options and is planning on introducing a premium "Alpha" account later this year which has a flat fee of around £7, says Dodds.

The company currently has around 25,000 customers, and 20,000 of the 100,000 on the waiting list are within the EU, Dodds said.

Freetrade launched an Android app earlier this month.

"We’re the first movers in the UK and we plan to press that advantage in Europe," Dodds added. "We’re focused on one thing and that is building the best investment experience out there."

Freetrade’s core demographic is between ages 25 and 35. The next stage in the company’s evolution is to bring in older investors who have their main savings with UK incumbents such as Hargreaves Lansdown and AJ Bell.

This latest funding round follows a £3 million investment last June (after targeting just £500,000) with Dodds saying the current approach allows the company sufficient legroom to operate, and doesn’t feel a pressure to break-even.

Further down the line it will be some time before Freetrade catches up with Robinhood which has a valuation of $5.6 billion after a massive funding round last year.

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Source: Business Insider – cburroughs@businessinsider.com (Callum Burroughs)