Commission Free Trading App, Robinhood, Raises $280 Million At A Valuation of $8.3 Billion

  • Robinhood, a commission-free trading app, has raised $280 million in a recently concluded series F funding held by the FinTech startup.
  • This funding round was led by Sequoia Capital, a prominent California-based Venture Capital, which was already an investor in the Robinhood portfolio.
  • The Robinhood venture was valued at $8.3 billion as of this market deal.

This is not the first time for Robinhood to attract such enormous funding, the firm raised $323 million in its July 2019 seed round. Now that the COVID-19 pandemic is forcing more people indoors, the app’s market share skyrocketed within the first quarter of 2020. Close to 3 million funded accounts have been opened since we began the year.

Robinhood’s Catch

Despite being in existence for only five years, Robinhood has given brokerage veterans like TD Ameritrade Holding Corp and Charles Schwab Corp a run for their money. The new approach of commission-free trading is gradually forcing Robinhood’s peers to abandon the ‘discount’ formula as a business strategy in the brokerage industry.

Apart from the product packaging, Robinhood also capitalized on the growing millennial market which is generally tech-savvy. The trading app gave easy access to financial assets like stocks and dynamic markets including crypto. According to a statement by the firm, it will further expand its services following the new capital injection,

“scaling our platform, building new products, and accelerating build-out of our operations,”

While the progress has been commendable, it has come with its own challenges for the Robinhood platform. The app has slowed down on several occasions due to heavy traffic causing some traders to miss out on executions that would have otherwise made them money.

Robinhood, however, assured its clients that they are working to compensate the affected parties on an individual basis. Nonetheless, a lawsuit has already been filed against Robinhood for the incurred losses by one of its account holders.

The FinTech Rush

This growing field that seeks to intersect finance and technology is not short of attention from investors. Just recently, a fintech startup dubbed ‘Stripe’ secured $600 million in funding which brought its valuation to $36 billion. This project focuses on creating a bridge for receiving payments and billing through an online avenue. It is also quite noteworthy that several startups within this space had scheduled IPO’s for 2020 but have since postponed given the COVID-19 uncertainty.

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