London-based eToro bags €232M at €3.2B valuation after SPAC deal falls through

London-based eToro, a social trading and multi-asset investment company that provides financial and copy trading services, announced on Tuesday, March 21, that it has secured $250M (nearly €232M) at a valuation of $3.5B (nearly €3.24B).

The funding round comes after eToro revealed its 2022 financial figures. 

The year’s highlights include $631M in total fees, with 48 per cent of that amount coming from stocks, 27 per cent from commodities, 19 per cent from cryptocurrencies, and 6 per cent from currencies.

There were 2.8 million funded accounts as of December 31, 2022.

eToro Founder, Yoni Assia, says, “As Q1 progresses, I’m hopeful that Yale Hirsch’s market theory ‘as goes January, so goes the year’ holds true. We’ve seen a positive start to the year with markets reacting favourably to ‘less bad’ news and retail trading hitting an all-time high.”

“Year to date, we have seen an improvement in total commissions and profitability compared with the previous quarter with higher engagement and trading activity from our users,” adds Assia.

Transaction Overview

This raised capital is not an equity round. It comes by way of an Advanced Investment Agreement (AIA), says Assia. This AIA funding was obtained through eToro’s agreement in February 2021 as a component of its intended SPAC deal.

The investors include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures, and a number of existing investors.

“An AIA is an agreement where an investor (or investors in this case) pays in advance for shares that will be allocated at a later date, sometimes at a discount,” Ken Smythe, founder and CEO of Next Round Capital Partners told TC.

About eToro

Founded in 2007 by David Ring, Ronen Assia, and Yoni Assia, eToro aims to open up global markets so that anyone can trade and invest in a simple and transparent way.

The eToro Group consists of the eToro platform, multi-asset trading and investment venue, crypto wallet, and on-chain crypto exchange. It offers users a choice of which assets to invest in from commission-free fractional equities to crypto-assets and a choice of how to invest.

Users can trade directly, invest in a smart portfolio, or replicate the investment strategy of successful investors on the platform at no extra cost.

The company’s products, OpenBook and WebTrader, allow traders to learn from each other, share live trading information, and capitalise on their collective power. 

Currently, eToro has a global community of more than 30 million registered users and has $5.8B in assets under administration.

eToro is governed by the Australian Securities and Investments Commission in Australia, the Financial Conduct Authority in the UK, and the Cyprus Securities and Exchange Commission in Europe.

Recent developments and growth ahead

In 2022, eToro signed an agreement to acquire options trading platform Gatsby to further diversify its US offering after the launch of stocks and ETFs. 

The company also acquired Bullsheet, a provider of portfolio management tools designed exclusively for eToro users.

The fintech company also expanded its global footprint by partnering with regulators around the world for the development of the digital assets ecosystem securing registrations in France, Italy, and, most recently, a licence in New York.

It also secured an in principle approval to operate as a broker in Abu Dhabi.

The company also partnered with ESG Book, a global leader in ESG data and technology, to introduce ESG scores for stocks on eToro as well as announced a partnership with Broadridge to enable proxy voting for over 2,700 stocks. 

Yoni Assia says, “I am very proud of the success with which we navigated 2022, continuing to grow our user base and enhance our product offering. Our 2023-2025 strategy focuses on scaling our brokerage business in our key markets and increasing profitability via revenue growth and cost management.”

“Last year, retail investors endured a tumultuous year and for many their first-ever bear market. Yet our latest quarterly Retail Investor Beat survey supports the activity we see on our platform – the retail investor is resilient.”

“While their short-term tactics may change in response to the market environment, they remain committed to their long-term goals. eToro will continue to focus on profitable growth while helping to drive progress towards a world where everyone can invest in a simple and transparent way,” adds Assia.