eToro Raises $250M After Scrapping SPAC Deal

Table of Contents

• SPAC Cancelled; Funding Commenced
• eToro’s AIA 
• The State Of eToro

The crypto trading platform has successfully raised $250 million in funding at a total valuation of $3.5 billion. 

SPAC Cancelled; Funding Commenced

The company had previously called off its plans to go public in 2022. At that time, its company valuation stood at a whopping $10.4 billion. The latest round of fundraising revealed that the valuation had dropped significantly to rest at $3.5 billion. eToro first announced its plans to go public back in March 2021. Back then, its valuation was calculated to be around $10.4 billion. However, in January 2022, the valuation got cut down by 15% to $8.8 billion. By the time July 2022 rolled out, the company had decided to terminate the SPAC deal due to the regulatory changes, resulting in further dropping of the company’s valuation. 

eToro’s AIA 

eToro has raised $250 million in an Advanced Investment Agreement (AIA), which is not your typical equity round. In an AIA, the investors pay discounted rates in advance to have shares allocated later. In this instance, the companies that have invested include ION Group, Social Leverage, SoftBank, and Spark Capital. These companies invested in the AIA back in 2021 as a backup in case the proposed SPAC did not pan out. The agreement between eToro and the investors was that if the SPAC transaction did not go through in two years and the company had not raised any additional capital, the AIA investment would be converted. 

Since then, the company terminated its SPAC agreement in July 2022. Even though there were reports of a private funding round for between $800 million and $1 billion, the company denied such claims. Therefore as per the agreement, the AIA investment has been converted. 

The State Of eToro

The company has had a very uneven growth in revenue over the last three years, despite announcing its metaverse ambitions in 2022. It even had to delist certain crypto from its platform over regulatory issues in 2021. However, the management is still projecting a very positive view of its situation. 

Recently, eToro CFO Meron Shani released a statement in which he wrote, 

“At eToro, we need no reminder that markets are cyclical. The diversified nature of our multi-asset product offering ensured that commissions from equities and commodities partially offset the decrease in commissions from cryptoassets in 2022. It’s also worth noting that we were not impacted by the liquidity concerns which plagued many in the crypto industry.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.