Trade Republic is poised to become the most valuable start-up in Germany, attracting substantial investment at a valuation of €12.5 billion. This valuation follows a share sale in which early investors are set to divest €1.2 billion in shares to prominent backers, including Peter Thiel’s Founders Fund and venture capital firms such as Sequoia. New entrants to the investor roster include major entities like Fidelity, Wellington, and GIC, Singapore’s sovereign wealth fund, alongside influential European family offices.
Previously valued at €5 billion during its last fundraising round in 2022, Trade Republic surpasses the valuation of defense technology firm Helsing, which secured €12 billion in funding earlier this year. Often likened to Robinhood for its low-cost brokerage model, Trade Republic has raised over €1 billion since its inception in 2015, establishing itself as a key player in the fintech landscape.
The share sale underscores the increasing reliance on secondary markets for late-stage start-ups due to the challenging environment for initial public offerings. Many founders and venture capitalists favor secondary sales to liquidate their stakes, while newcomers use these opportunities to invest in high-growth private firms. This transaction primarily involves the transfer of existing shares rather than new capital injection.
Trade Republic has seen significant growth, boasting over 10 million customers and around €150 billion in client assets. The company, which achieved profitability two years ago and received a full banking license this year, has expanded its offerings beyond trading into areas such as savings accounts and cryptocurrency wallets. However, it faces challenges, including an impending EU ban on “payment for order flow,” which has historically accounted for a significant portion of its revenue.
Why this story matters
- The growth of fintechs like Trade Republic reflects changing investment behaviors in Europe.
Key takeaway
- Trade Republic’s model and expansion highlight the increasing appeal of low-fee brokerage services.
Opposing viewpoint
- Regulatory changes may pose significant challenges for Trade Republic, impacting its revenue streams.
