eToro IPO nets Spark Capital $530 million gain from early bet

Venture firm Spark Capital saw a gain of about $530 million this week when EToro Group Ltd. went public, according to people familiar with the matter — the culmination of an early bet it placed on the Israeli startup 15 years ago.  

Spark was the largest shareholder in EToro when it listed with a $4.3 billion market capitalisation this week, owning about 13% of the company according to filings.

The venture firm had put a total of about $19 million into EToro, according to the people, who asked not to be identified discussing private information.

By the time the company went public, Spark had made about 29 times its money. 

“It took a lot of pain and suffering to get here,” Spark co-founder Santo Politi said in an interview Wednesday. Spark first invested in EToro in 2010, when Politi joined the company’s board. The firm declined to comment on the exact dollar value of its investment. 

Investors gave EToro a favourable reception in the public markets this week, which further buoyed Spark’s investment.

The company’s first-day gain of 29% added almost $148 million more to the value of Spark’s stake in the company, in addition to its holdings at the time of the listing. 

Spark sold a small stake in the IPO but retains most of its shares.

Social media-driven investing

Politi said he initially invested in the trading startup, an international competitor to Robinhood Markets Inc., because it fit the venture firm’s thesis on social media, bringing the technology to the finance world.

Spark also made bets on Twitter and Tumblr.

EToro had a winding path to the public markets, Politi said, including a SPAC deal in 2021 that was never finalised.

EToro had planned to go public last month, but temporarily delayed its debut due to market uncertainty around tariffs. For a while it seemed like as soon as the company would get close to listing, “every time something happened,” Politi said. 

But there was also good news for EToro. Competitor Robinhood has seen its shares soar 55% year-to-date, fueling investor enthusiasm about the broader category.

Better-than-expected demand

The initial public offering provides the venture capital industry with a much needed exit, meaning an IPO or acquisition.

The industry has seen few names go public since the 2021 boom, leading to a cash drought as money is tied up for long periods. 

Politi hopes that Etoro’s better-than-expected demand will be a bellwether for other market debuts. Spark is also an investor in Discord, which has recently been taking steps toward going public.