Trading platform eToro has raised $250 million in funding at a valuation of $3.5 billion, the company announced on March 21. The Israel-based firm raised capital for the first time in 2018 after failing in its attempt to go public last year through a merger with a special purpose acquisition company (SPAC).
Participants in the round include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures and some existing investors.
According to eToro, the funding comes from an Advance Investment Agreement (AIA) entered into in early 2021 as part of its proposed SPAC transaction. An AIA is a legal agreement between an investor and a company, under which the investor agrees to invest in a company in the future.
By signing an AIA, investors and the company agree in advance to the key terms of the investment. In the case of eToro, the investment would continue two years after its signing and under certain requirements, such as not carrying out a SPAC operation or raising additional capital. As both possibilities did not materialize, the AIA operation went ahead.
In 2021, eToro and Fintech V announced the SPAC acquisition, valuing the trading platform at $10 billion. However, the fall in the cryptocurrency markets affected the company’s plans. In July 2022, eToro and Fintech V announced a bilateral agreement ending the merger.
According to eToro, commissions amounted to USD 631 million in 2022, 49% less than in 2021 and just 5% more than in 2020, when it reached USD 605 million in revenue. Its SPAC deal filing forecasts revenue to reach $2.5 billion by 2025.
“We’ve had a positive start to the year, with markets reacting favorably to ‘not-so-bad’ news and retail trading reaching all-time highs,” eToro founder and CEO Yoni Assia said in a statement. “To date, we have seen an improvement in total fees and profitability compared to the prior quarter, with increased engagement and trading activity from our users.”
Despite the market turmoil, eToro completed two acquisitions in the past year. In August, the company announced the purchase of the Gatsby options trading app; in October, it acquired the social investment network Bullsheet.
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