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eToro Raises $250M And Takes Valuation Nosedive On The Chin

Trading platform eToro has recently announced that it has secured $250 million in funding at a valuation of $3.5 billion. 

It is the first time the Israel-based firm has raised capital since 2018, after it failed to go public through a special purpose acquisition company (SPAC) merger last year.

The funding round included SoftBank Vision Fund 2, ION Group, Velvet Sea Ventures, and some existing investors. 

According to eToro, the funding came from an Advance Investment Agreement (AIA) made earlier this year as part of its proposed SPAC transaction. The AIA is a legal agreement between a company and an investor under which the investor commits to investing in the company.

The investment will be carried forward two years after its signature and under specific requirements, such as not pursuing a SPAC transaction or raising additional capital. As both possibilities did not materialize, the AIA deal moved forward.

Last year, eToro and Fintech V announced a SPAC takeover, valuing the trading platform at $10 billion. However, the merger did not push through due to the downturn in cryptocurrency markets. As a result, last July, both companies announced the termination of the merger.

Despite this setback, eToro completed two acquisitions in 2022, including the buyout of options trading app Gatsby and the acquisition of social investing network Bullsheet.

According to eToro, commissions amounted to $631 million in 2022, down 49% from 2021 and up just 5% compared to 2020 when the company reached $605 million in revenue. Its SPAC filing projected revenue to reach $2.5 billion by 2025.

“We’ve seen a positive start to the year with markets reacting favorably to ‘less bad’ news and retail trading hitting an all-time high,” eToro founder and CEO Yoni Assia said in a statement. “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.”

In summary, eToro has secured $250 million in funding, marking its first successful capital raise since 2018. Despite failing to go public through a SPAC merger in 2022, the company has secured the funding through an Advance Investment Agreement with a group of investors.

JP Buntinx
JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.