INSUBCONTINENT EXCLUSIVE:
Robinhood started off as a dead-simple stock trading application that had no transaction fees — but since it’s continued to grow, and
especially as it starts to dive into cryptocurrency, investors are getting pretty excited about its prospects and are pouring a ton of new
funding into it.And it’s that tantalizing prospect of creating a next generation way of trading assets and cryptocurrency that is now
sending Robinhood to a $5.6 billion valuation in a new financing round that the company is announcing today
Robinhood says it’s closed a $363 million Series D financing round; DST Global led this new round and Iconiq, Kleiner Perkins, Sequoia and
Robinhood had a $1.3 billion valuation last year when it had around 2 million users, and the company says it now has 4 million users and has
passed $150 billion in transaction volume.“It’s the only place right now where you can trade crypto, stocks, and options all in one
place,” CEO Vlad Tenev said
“For us to construct an experience that feels seamless and natural for customers, that for example want to sell an equity and use the
proceeds to buy crypto, seamlessly, that’s been challenging not just from a product and design standpoint, but also infrastructure
There’s complexity under the hood, and our goal is to make it as seamless as possible in the process and make that complexity go
away.”Those 4 million users — and that valuation — indicates that Robinhood has clearly exposed a lot of demand for an easier way
for users to dip their toes into financial services without having to work with firms that have trading fees like Scottrade or E*Trade
And while there are a lot of services that offer robo-advisory services like Betterment and Wealthront, which make it easier to start
investing small amounts of money, Robinhood offers users the opportunity to do these things at a more granular level.And, of course,
there’s the cryptocurrency aspect that is clearly spurring a lot of interest in the company
At the time, 1 million users waitlisted for access in just the five days after Robinhood Crypto was announced
Robinhood has premium services like Robinhood Gold, where the company can find additional ways to generate revenue that offset the
requirements of running a system that allows users to trade stocks for free
Robinhood has raised $539 million to date, as diving into financial services can be an expensive prospect, as well as getting enough users
on board to the point that it can scale to a level that the business starts to increasingly make sense.Robinhood’s crypto trading service
came out in February and by today, the company says it’s available in 10 states
The company also rolled out a web version and stock option trading, trying to become a more robust financial services company that’s still
tuned to a younger generation that wants an easier way to get into investing without needing a big balance to invest
Most of Robinhood’s users, too, aren’t so-called “day traders” and are instead holding stocks for a while after they buy them.“If
you look at the data and the statistics, people that are active day traders are actually a very small percentage of our space,” Tenev said
“People that are actually transacting on that cadence are the minority of our customers
Most of our customers engage in more of these buy and hold accumulation strategies
We really see a lot of unique things because we don’t charge trading commissions
There are customers that deposit money regularly twice or once a month and then buy stocks as soon as those deposits come in
We don’t see a lot of customers that are doing rapid buying and selling.”Still, as it tries to further expand — especially into
products like crypto and new regions — it’s going to increasingly find itself trying to jump hurdles that financial services companies
And there’s always a chance that the trading platforms will try to become a little more competitive (and companies like Square are even
getting into Bitcoin trading)
That’s going to require a robust amount of funding to try to outmaneuver well-capitalized companies that might already have those
relationships in place to more easily expand.“The political climate is uncertain, it sort of affects everyone, it doesn’t affect us
“We’re a crypto business now
Not a lot of people have a ton of clarity on what that’s gonna look like in the future, it’s a new space that’s evolving really
I think that we’re confident we can adapt and evolve, and we’re operating the business in a responsible way
There’s only so much you can do, but I feel like we’ve done a lot to address any concerns.”
