eToro Trades in Valuations: Why the Trading Platform Turned to Traditional Financing

03/21/2023 14:27 • Blockchain Briefs • 100 views

According to reports, after canceling the plan to list through SPAC at a valuation of $10.4 billion in 2022, the trading platform eToro obtained a financing of $250 million at a valuation of $3.5 billion. Investors include ION Group, Social Level, SoftBank, and Spark Capital.

EToro completed $250 million in financing

In recent months, eToro, one of the world’s leading trading platforms, has made waves after reportedly opting out of a listing via SPAC, much to the surprise of the trading community. Instead, the platform is said to have received a $250 million financing round, significantly less than the rumored $10.4 billion valuation.
In this article, we break down the reasons behind eToro’s decision to turn to traditional financing while analyzing the implications of the platform’s decision.

The Background

In 2022, rumors circulated that eToro, valued at $10.4 billion, would go public through a Special Purpose Acquisition Company (SPAC). However, in August 2021, reports emerged that the company would instead raise $250 million through a series E financing round led by ION Group, Social Level, SoftBank, and Spark Capital. This funding round lowered eToro’s valuation to $3.5 billion.

Why eToro Cancelled its SPAC Plans

One major contributing factor to eToro’s decision to opt-out of a SPAC listing was regulatory concerns. According to reports, the platform did not receive clearance from the US Securities and Exchange Commission (SEC) to list through SPAC.
Additionally, the SPAC route is more complex, and success is not guaranteed. The complex nature of the procedure means that companies have to commit significant resources to ensure a successful listing, including legal and financial consultancy firms. If things go wrong, investors can pull out of the deal, leaving the company with no funds.

The Implications of eToro’s Decision

eToro’s decision to opt for traditional financing raises a few concerns, especially because the platform is seeking to expand its reach. For example, some commentators have speculated that eToro’s $250 million financing may not be enough to compete effectively with other trading platforms that have raised much more money.
eToro’s venture into traditional financing and the lower valuation they received shows that SPAC is not the only way to raise funds. As more companies explore traditional financing, it may lead to tighter controls and more transparency in the process.

Conclusion

While eToro’s decision to opt-out of SPAC was surprising, it is a sign that the company is willing to explore more traditional means of raising funds while navigating regulatory hurdles. More importantly, it shows that traditional financing can still be a viable alternative to SPACs.

FAQs

Why Did eToro Opt-out of SPAC Listing?

eToro reportedly did not receive clearance from the US Securities and Exchange Commission (SEC) to list through SPAC. Additionally, the complexity of the process meant that if things went wrong, the company risked investors pulling out, leaving them with no funds.

What is the Significance of eToro’s $250M Financing?

eToro’s $250 million financing raises concerns about the company’s ability to compete in the market. Given that other platforms have raised a lot more money, it remains to be seen whether eToro’s financing will be enough.

What Does eToro’s Decision Mean for the Industry?

eToro’s venture into traditional financing and the lower valuation they received shows that SPAC is not the only way to raise funds. As more companies explore traditional financing, it may lead to tighter controls and more transparency in the process.

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