eToro raises $250M after terminating SPAC deal
Trading platform eToro has secured $250 million in funding at a $3.5 billion valuation, the company announced on March 21. The Israel-based firm raised capital for the first time since 2018 after failing to go public last year through a special purpose acquisition company (SPAC) merger.
Participants in the round include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures, and some existing investors.
According to eToro, the funding stems from an Advance Investment Agreement (AIA) entered in early 2021 as part of its proposed SPAC transaction. The AIA is a legal agreement between an investor and a company, under which the investor commits to investing in a company in the future.
By signing an AIA, investors and the company agree on the key terms of the investment upfront. As for eToro, the investment would be carried forward two years after its signature and under certain requirements, such as not pursuing a SPAC transaction or raising additional capital. As both possibilities did not materialize, the AIA deal moved forward.
In 2021, eToro and Fintech V announced the SPAC takeover, valuing the trading platform at $10 billion. However, the downturn in cryptocurrency markets has affected the firm's plans. In July 2022, eToro and Fintech V announced a bilateral agreement terminating the merger.
According to eToro, commissions amounted to $631 million in 2022, down 49% from 2021 and up just 5% compared to 2020, when it reached $605 million in revenue. Its SPAC filing forecast revenue to reach $2.5 billion by 2025.
"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," said eToro founder and CEO Yoni Assia 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.”
Despite market turmoil, eToro completed two acquisitions last year. In August, the firm announced the buyout of options trading app Gatsby; in October, it acquired social investing network Bullsheet.