eToro, the prominent European trading app, has announced it's going public via a blank cheque company (or SPAC).
The startup has agreed a valuation of $10.4bn as part of a merger with the FinTech Acquisition Corp. V, a shell company that is publicly listed in the US.
It comes as little surprise, given eToro — founded in Israel in 2007 — has long hinted at plans for a public listing. Nonetheless, today's deal exceeds expectations reported in December that eToro was eyeing a $5bn listing on the Nasdaq exchange.
Bloomberg first reported the SPAC merger, before eToro confirmed it.
"Today marks a momentous milestone for eToro as we embark on our journey to become a publicly traded company with...the team at FinTech V,” said Yoni Assia, CEO of eToro in a statement.
Special purpose acquisition companies (SPACs) have boomed in popularity over the past 12 months, with investors racing to capture late-stage startups. These shell companies buy startups and offer them a quick supply of capital, as well as possibly a "softer" route to the public stock markets.
Still, in a conversation with Sifted earlier this year, Assia argued that the differences between an IPO and a SPAC "are slim eventually” and that the SPAC trend "was here to stay."
He added: "[The SPAC] discloses more than what a public market would usually disclose."
Bad news for the Euros
While the news is a sign of confidence in the fintech, European investors won't reap much of the benefits.
Indeed, the company's main investors are from the US and China, including Ping An and China Minsheng Financial, who led the company's Series E. One major investor noted that these deals highlight how "the people making money [from these scaleups] are not European."
For clarity, its handful of early European investors include Anthemis, Israeli group BRM Capital, and Germany's CommerzVentures.
The threat of Europe's top tech startups flocking to US exchanges is now becoming a major concern among both investors and government officials. Klaus Hommels, the founder of top venture firm Lakestar, recently told Sifted that keeping home-grown tech startups local was a question of "digital sovereignty."
There are around 20 US SPACs now reportedly courting Europe's top tech unicorns, and in talks for potential mergers.
A strong year
eToro's growth trajectory seems to have primed it for a public offering.
The company reported its 2020 revenues had soared to over $600m, as well as attracting 5m new registered users. Of this, eToro told Sifted that it had it had seen a 366% growth in female investors.
The company also recently begun creeping into the US, reporting 70k signups in January alone.
“I underestimated the size of the US market," Assia told Sifted in a recent interview. "People [across Europe] still have a very different language, markets and approach. What I see in the US is the potential for one market.”
He added that he was "looking at M&A opportunities to constantly scale up eToro."
The company is renowned for its “copycat” trading system, allowing amateur investors to track more experienced traders, who in turn earn commission.
It also has a prominent crypto outlet, allowing clients to buy digital assets, which is said to make up nearly a fifth of its recent revenues.
In the UK, the company is licensed by the FCA.
Isabel Woodford is Sifted’s fintech correspondent. She tweets from @i_woodford