Despite a global pandemic and recent outages, mobile trading app Robinhood, is raising more capital.
Sources told Bloomberg Robinhood is in the process of bringing on around $250 million in venture funding at a pre-money valuation of $8 billion. That’s up from its valuation of $7.6 billion the last time it raised capital in July. Since its inception in 2013, Robinhood has raised $900 million in venture funding. A pre-money valuation refers to the valuation prior to the investment.
Sequoia Capital, the venture capital firm, is reportedly leading the round of funding that also includes participation from several other investors. The round may not happen if all the involed parties can’t reach a final deal, noted Bloomberg. In addition to Sequoia, Robinhood’s investors include Kleiner Perkins, Thrive Capital, and NEA, among others.
While Robinhood suffered public outages in the early days of the COVID-19 pandemic, when the stock market was seeing steep declines and gains, the mobile app still remains popular among millennials. Sources told Bloomberg Robinhood has revenue of $60 million in March, which was triple the revenue it had in February. At the end of December it had more than 10 million accounts, which is more users than E*Trade, the online trading firm being acquired by Morgan Stanley MS.
Robinhood wasn’t the only trading firm to suffer outages during the historic trading days in early March. Fidelity and Charles Schwab also suffered technical difficulties. Robinhood said it’s outages were caused by heavy trading volume and record account sign ups. A spokesperson told CNBC that in March average daily trading volume was three times the trading volume in the fourth quarter. It also said it saw net deposits enjoy a tenfold increase compared to the fourth quarter.
Robinhood’s ability to raise more capital is impressive given the global economy is getting battered as millions of people are ordered to shelter in place and practice social distancing. Other fintechs have been forced to furlough or lay off workers amid the pandemic.
Toast, the fintech that makes point-of-sale software for restaurants, laid off 50% of its workforce or 1,300 while Kabbage, the SoftBank backed online lender furloughed a significant number of workers and shuttered its Bangalore, India office. The company hopes to bring back many of the furloughed employees now that its offering small businesses loans via the CARES Act. Carta, the software startup that helps people manage their equity in other startups, is laying off 161 employees or 16% of its workforce. Still Bloomberg reported the company is looking to raise $200 million in a fresh round of funding at a valuation of $3 billion. That’s up from the $1.8 billion it was valued at in 2019.
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