FinTech: Robinhood, the Fee-Free Trading App, Raises $320M At $8.6B Valuation
The millennial-loved, but controversy-prone platform becomes one of the most valuable fintech startups in America.
Nothing, it seems, can stand in the way of Robinhood’s cash chase. COVID-19 notwithstanding, the share trading and investment platform announced and raised in May an ‘F’ funding of $280 million. That round got rounded up nicely to $600 million Monday after the fintech announced its expansion and raise of an additional $320 million. Investors in Monday’s tranche included TSG Consumer Partners and IVP. (FINOVATE)
Robinhood said its post-money valuation is now $8.6 billion.
Solid growth amidst the pandemic
Retail investors made a bee-line for Robinhood’s commission-free brokerage services and lucrative cash management offering during the pandemic months. The fintech said at the time of its first Series F funding of $280 million:
Amid challenging times and market volatility, we’re humbled that people are turning to Robinhood to participate in the markets and build their financial future. We added more than three million funded accounts so far this year, and we’re grateful for the opportunity to serve each customer. We’re also proud to have built a platform that empowers people: Half of new Robinhood customers this year were first-time investors.
However, there was a recent, tragic incident among the millions of millennials that seem to have cottoned on to the fintech’s seemingly Pied Piper-like promise of financial riches. A 20-year old Robinhood trader committed suicide after his account ran into the red to the amount of over $700,000.
“Robinhood has made the financial markets accessible to the masses,” commented Sequoia Capital partner Andrew Reed in May. However, it appears the company needs to do a better job of explaining the risks of trading the markets to its new-found army of retail investors.
Robinhood also provides cryptocurrency trading services.
On other occasions in 2020, Robinhood’s trading platform suffered multiple outages, often at extremely sensitive and volatile points in the equity markets. At least one person has filed a lawsuit against the firm.
At the time of its May raising, the fintech said it intended to use the funds to invest in scaling its platform, building new products, and accelerating the build-out of its operations.
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