eToro valued at $2.5 billion in massive $120 million secondary deal
eToro valued at $2.5 billion in massive $120 million secondary deal
The buyers in the transaction are two of the largest investors from the company's previous funding round
Current and former employees, as well as early investors in Israeli company eToro, are set to complete a large secondary deal in which they will sell $120 million worth of shares. According to estimates, the transaction will be carried out at a company valuation of $2.5 billion, similar to eToro's value in a previous secondary transaction in 2020, and about a quarter of the value the company planned to acheive in a Wall Street IPO in 2021.
The buyers are two of the company's largest shareholders who participated in eToro's last funding round and want to increase their holdings in the company. eToro is not a party in the transaction and will not receive any of the money.
eToro, which has developed a social investment platform, completed its last funding round in March, raising $250 million at a $3.5 billion valuation. The founding round was led by ION Group and Softbank's Vision Fund 2, and included participation by Velvet Sea Ventures, and a number of other existing investors.
With the Wall Street IPO market still experiencing a slowdown, private secondary deals have become a highly sought-after commodity. These transactions allow the sale of shares in a private company by existing shareholders without issuing new shares. Veteran employees, former employees and angel investors are looking for an opportunity to liquidate their shares, while investment entities are taking advantage of the expanding supply to purchase shares at a discount compared to the value from a couple of years ago. According to estimates, an even bigger secondary deal involving a local unicorn is currently in the works. The transaction is believed to be worth around $200 million.
eToro concluded 2022 with revenues of $631 million, a 49% drop compared to 2021. The decrease is due to a sharp slowdown in activity in the crypto market, so that the share of crypto trading, which was one of the strongest engines of growth for eToro in recent years, amounted to 19% compared to 48% of the revenues that came from trading stocks and indices. Against this background and with the announcement of the cancellation of the IPO, eToro laid off 100 employees, approximately 6% of its workforce. Today it employs about 1,700 people, 1,000 within Israel.
