Digital investing platform eToro has scrapped a much-anticipated SPAC deal and raised $250 million in a funding round, with its valuation cut to a third of its SPAC valuation.
Israeli online trading platform eToro has terminated its SPAC merger, and its valuation was reduced to just $3.5 billion during a funding round, where it raised $250 million.
While the funding round is now closed, it is believed the company had already received the funds via an Advanced Investment Agreement.
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According to the eToro announcement, it received $250 million through an Advanced Investment Agreement (AIA) signed in 2021 as part of the SPAC merger. An AIA is an agreement where an investor commits to investing in a firm in the future.
eToro received investments from companies like Velvet Sea Ventures, ION Group, and SoftBank Vision Fund 2.
In the announcement, eToro has also revealed that its revenue fell by 35% in 2022 to $631 million from $972 million in 2021. According to the online trading platform, the revenue drop was impacted by the fall in crypto trading activity, with investors moving to commodities trading such as gold, crude oil, and natural gas.
However, the company saw trading accounts on the platform rise to 2.8 million by December 2022, representing a 16% increase from the same period in 2021 and rising 180% from the previous two years.
When talking about the company's plans for 2023, eToro founder and CEO Yoni Assia stated:
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.
eToro’s first funding round was in March 2018, when it received $100 million from investors and was valued at $800 million. During the COVID-19 pandemic, the company’s valuation shot through the roof, arising from increased interest in online trading.
The company initiated plans to go public in 2021 via a SPAC merger deal with FinTech Acquisition Corp V, at a valuation of $10.5 billion. The valuation was cut to $8.8 billion months later. After months of negotiation, the SPAC merger fell through, and eToro's valuation fell to just $3.5 billion.
