Freetrade is a challenger stock broker that is working to change how users have access to stock trading and the whole financial market. By offering a freemium number of services, the company is providing solutions to make it possible for everyone to have easy, accessible, and affordable stock ownership.

In a recent interview with LearnBonds, the co-founder and CMO of the stockbroker startup Freetrade, Viktor Nebehaj, shared his views about the future of the company and talked about how Brexit is affecting their operations.

1. How has 2019 been for Freetrade? What have been your main achievements this year?

“2019 has been our most momentous year yet. Over the past year, we’ve grown from eight to over 50 employees, amassed more than 60,000 customers, with our growth accelerating, and raised over £6m through crowdfunding, including raising £1m in 77 seconds – Crowdcube’s fastest £1m raise! From a product standpoint, we removed the waitlist and launched the Android app making the product officially available in the UK. We expanded our stock universe to more than 575 stocks, ETFs, and trusts, including both UK and US securities, and we are getting ready to add many thousands more. We also added Apple and Google Pay to simplify top-ups and rolled out ISA transfers.”

2. Will Brexit affect your business at all? Do you think it will hurt the future of London-based tech startups?

“It’s started affecting our business from the referendum. Even before Adam (Dodds, CEO) incorporated the company, he planned to go Europe-wide. As we built Freetrade, contrary to the attitude of several other fintech startups, our view has been that the regulators are not an impediment to outwit, but an opportunity that we embrace. Our mission will only progress if we build trust, and they are an integral part of that. We have been authorized and regulated by the FCA since 2017, and we have just received additional permissions from the FCA in July this year. So, this is something we are taking seriously. While we’ve had our passporting rights for years, Brexit made the future of those uncertain. We’ve had to come up with a plan, and we’ve taken steps to make sure we don’t have to delay our EU expansion. This costs time and money. Another aspect of Brexit is its impact on hiring. The brand of the UK changed, and EU candidates that would have happily moved here might choose Berlin, Amsterdam, or even Dublin now. In my view, Brexit will absolutely make an impact on London-based tech startups, and as the brunt of it is ahead of us, the current sentiment might be that it won’t be that bad, and we’ll continue to thrive. That goes against the logic of what’s going to happen, as we would have less access to talent and one of the top consumer markets in the world, including well over 100 million millennials. We’re not going anywhere, but our strategy had to be adjusted. From a personal standpoint, the EU gave me the opportunity to move to Dublin and join Google in 2005 easily. I grew up in an impoverished region of Eastern Europe where car manufacturing helped our community to survive, so some of the news I’m reading is quite heartbreaking.”

3. Why did you decide to use crowdfunding to raise investment vs traditional angel investors? Would you recommend this strategy to others?

“In the beginning, we’ve had the insight that users of crowdfunding platforms are investors already, and a lot of them would understand our product the right away. These same users could be your current and future users as well, so a similar logic could apply to many other consumer startups, as long as you have product/market fit, so in that sense, I’d recommend at least exploring the strategy for those companies. Our first round in 2016 resulted in 140 original investors, which was the seed of a waitlist that grew close to 100,000 members, as the word spread. I was the very first investor in that round that invested a meaningful amount, and I ended up joining Adam as his Head of Growth and cofounder at the time because I was so impressed with his vision and wanted to help him make it happen. Since then, we’ve raised over £10m from our community members, and every time we crowdfund, we gain new advocates and customers. Our community has been a massive part of our success. They’ve been our biggest champions and continuously push us to build the right features and improve the product. So, crowdfunding benefited us in more ways than one. A lot of other startups reach out for tips, and we’re happy to give them. Crowdfunding is aligned with our mission of making investing accessible and helping regular people getting cut into economic and financial growth they’re currently excluded from.”

4. There appears to be a race to offer free-stock trading between challenger banks, CFD and traditional US stock brokers. Who do you see being victorious and why?

“I see Freetrade being victorious in terms of becoming the largest, most trusted product in Europe and beyond. Of course, we have a lot to build to get there, but I personally see ourselves structured the best to achieve that. Traditional US stockbrokers will find it harder to implement and operate the zero-commission model. As a mobile-only startup, tech enables huge savings and a different cost structure for us. That said, expectations have changed for good. Incumbents have no choice, and they have to implement zero fees to acquire millennial customers, including in the UK, successfully. We’ve already seen explosive demand for our product, but no one has a monopoly over zero-commission stock trading. In a future world of many zero-fee providers, trust, transparency (particularly in Europe), and technology (the three T’s as we dub them internally) will be the differentiating factors. Incumbents can’t take any of these factors for granted when it comes to millennials. The same applies to the UK incumbents as well. The pressure is on, the millennial customers hear about scandals, exorbitant fees that pay for Mediterranean island hopping, and their expectations are radically different when it comes to those three T’s above. In my view, CFD providers will increasingly suffer from a trust deficit. And challenger banks need to focus on the core, otherwise, they can’t create banking products that go deep enough. Investing is not something you just slap on. That said, we have a lot to do to make progress, and it isn’t a winner takes all market.”

5. What’s your opinion on cryptocurrencies? Do you have any plans to add them to your platforms as Robinhood and Revolut have done?

“Interestingly, when the Bitcoin price rallies, we get a lot of emails asking us to add crypto, but these requests go away overnight when the rally ends. For a while, we explored the idea of adding cryptocurrencies to the app, but we’ve come to the view that it wouldn’t be in the best interest of our users, as crypto can be extremely volatile. We want to help our users build positive habits that encourage individuals to think about their long-term savings instead of getting rich quick schemes.”

6. What are your top 3 most important lessons that you have learned since taking the company to where it is?

“First of all, your company has to have product/market fit from the beginning. This is essential if you want to build a high-growth startup and have continuous, sustainable user growth. And you have to double down, once you have that. The growing user base should morph into a community that loves and embraces the product and keeps the team accountable for features and product enhancements. That’s a real moat. Always double down on the right things and be intense about them. Another one, when you’re building a startup, it’s continuously shedding its skin and morphing into something that’s not right for everyone. It seems to me that it was yesterday our whole company fit around a relatively small table at the Korean hotpot place next to our first office. But not everyone from the early team stays for the entire ride. If the startup is going places, its culture scales into a higher-performing one that’s not a fit for everyone. The third one is related. It’s never too early to start working on your culture. People have incredibly differing attitudes to work, and the time to start figuring out your collective approach is when you begin working with your co-founder(s). For us, it was essential to understand that we need people with grit that are resourceful and can fully own things.”

7. What are your thoughts on Facebook Libra? Do you think it will be a net benefit for Facebook users? Do you think it will change the financial banking landscape?

“I’m European. A huge American company that already has so much access to our pictures and communications, having access to information that is in our transactions, is an uncomfortable idea. The technology might be cool, but I don’t see a genuine, meaningful problem Facebook tries to solve here. The most significant promise of fintech is not the tech for its own sake, but that off the back of it, we can relatively easily (compared to a few decades ago) build companies and products that put a lot of value on transparency and treating customers fairly. I’ve joined Freetrade to work on that and on the mission of making investing accessible and helping people get cut into the growth they’re excluded from. Those are problems worth solving.”

Thank you, Viktor, for the conversation!