The Trade Republic co-founder wants to expand further.
(Photo: Trade Republic)
Frankfurt Berlin-based neobroker Trade Republic is expanding its latest round of financing by EUR 250 million. The new investment is led by the Canadian teacher pension fund OTPP. Existing investors are also participating again. Trade Republic announced this on Friday.
This increases the valuation to five billion euros. “Given the current market environment, the improvement in our rating is real proof of our progress over the last twelve months,” says Trade Republic co-founder Christian Hecker.
In May 2021, the company raised 740 million euros and was valued at 4.4 billion euros. This was one of the largest fintech financing rounds in Europe to date. Among other things, the well-known US fund Sequoia was also involved.
Rumors about a financing round with OTPP as lead investor have been circulating for some time. In the meantime, however, there has been speculation that the changed market environment could hinder the conclusion of the transaction.
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During the corona pandemic, Trade Republic benefited greatly from the fact that many investors had discovered their interest in the stock markets for the first time. There has been a real hype surrounding some technology stocks. In addition, the neo-broker scored with many newcomers to the stock exchange with low fees and the easy handling of its application.
Additional capital for product development
But in recent months, price losses in tech stocks have dampened sentiment. As a result, many investors are now taking a closer look at start-up financing rounds. The young companies that still get money can no longer count on rapidly increasing valuations. In start-up circles, the fear of “flat rounds” or even “down rounds” is more common. This refers to rounds of financing in which the company valuation no longer increases or even decreases.
In this respect, Trade Republic considers the extended round of financing a success. Investors’ requirements have changed, explains Hecker: growth at any price no longer counts today. “Instead, we too must examine more closely which of our investments will be successful in the coming years. We are all the more pleased that we were able to win OTPP as a new anchor investor.”
Operationally, 2022 was the best first quarter in the company’s history, says Hecker: “We are currently seeing that investors are sticking to their savings plans.”
The neo-broker wants to invest the additional capital primarily in product development. The company, which was founded in 2015, has recently expanded into several European countries and, in addition to Germany, is also active in Austria, France, Spain, Italy and the Netherlands.
“The fact that we managed to enter the market in several European countries in the last few months was an essential prerequisite for attracting investors to expand the financing round,” says Hecker. The aim is to start in other foreign markets in Europe within a year.
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