Following reports last month of Chinese and Russian investors providing new funding for eToro, the social trading broker today confirmed the new round. According to the company, Chinese venture capital firm Ping An Ventures, which operates under Ping An Insurance (Group) Company of China, Ltd., and SBT Venture Capital, a fintech focused fund whose main partner is Russia’s largest bank, led a $27 million equity financing round for the broker. Also participating were existing investors Spark Capital and BRM Group, with the financing also including a credit facility from Silicon Valley Bank.
As reported earlier, the new funding is aimed at accelerating eToro’s global growth with emphasis on China and Russia where they recently rolled out new products specifically geared to customers of those countries.
Welcoming its two new equity shareholders, representatives from the firms commented in eToro’s public remarks about the news with Mircea Mihaescu, Managing Partner of SBT Venture Capital, stating, “eToro has become synonymous with financial innovation among members of Gen Y all over the world.” Mihaescu added, “Social Investment is changing the way people trade and invest as part of a revolution started by eToro and we are thrilled to partner with such a successful and promising company.”
Also commenting was Jiang ZHANG, Director of Ping An Ventures, who refered to eToro’s potential in China when stating, “We are confident that this partnership will enable eToro to quickly expand its network in the fast-growing China market.”
Liquidity Constraints in 2021 – What is the Best Path Forward?Go to article >>
With the new funding, a potential IPO is now not expected to take place until at least 2016. A seven-year old firm going public was viewed as a potential alternative due to eToro being a venture-backed firm, as well as their focus on relocating their main regulatory operations to the UK. However, these plans may have been delayed in favor of eToro desiring to gain additional global growth to increase its potential valuation, as well as due to a lack of clarity on the legalities of social trading in the UK.
Although opening a UK presence in 2013, eToro continues to operate out of Level39 in Canary Wharf, London, with only a small office and workforce in place. The firm is known to be in discussions with the UK’s financial regulator, the FCA, and has appointed and confirmed Paul Chrimes as the head of its London-based operations. However, like several other firms with CySEC and UK regulation, eToro is yet to begin onboarding clients to its copy trading platform through its FCA license.
With the status of copy trading in the UK still up in the air, and as the FCA has been meeting with brokers individually to form guidelines on which regulatory licenses are needed to offer the managed trading product, eToro now has the cash to focus on expanding within growing markets.
At the time of launching yuan and ruble trading in October, representatives of eToro commented to Forex Magnates that both China and Russia were regions of growth for the broker. As such, the arrival of Ping An Ventures and SBT Venture Capital and their local connections is expected to assist eToro is expanding their operations in both China and Russia.
Referencing the potential business advantages of their new shareholders, Yoni Assia, CEO and Co-Founder of eToro, stated, “We’re very excited to have two of the largest financial institutions in the world join our company as partners. We look forward to leveraging their deep industry knowledge and expertise with our disruptive vision and product.”