Robinhood is now an unlisted startup with a valuation in excess of $10 billion. Only a month ago, the company was still a long way from that
The trading app is reaching new heights. From May to August, fintech succeeded in completing three fund-raising campaigns for more than $200 million.
Robinhood is now an unlisted startup with a valuation in excess of $10 billion. Only a month ago, the Silicon Valley company was still a long way from that. But its extraordinary growth and the speculation surrounding the trading platform have had their little effect: fintech has just completed a third round of financing in just four months.
This Series G round welcomed D1 Capital Partners, an investor who had already joined the capital of the British fintech TransferWise at the end of July. For Robinhood, the summer period was one of the most fruitful in the startup universe. Its round of financing enabled it to pocket an additional $200 million, the opportunity to accumulate the equivalent of $800 million since May, and to position itself as a very promising player in brokerage, both on classic products (shares) and on crypto-currencies.
Thus, Robinhood is now valued at 11.2 billion dollars, largely exceeding the 8.6 billion dollars announced during the last Series F on July 13, when the trading application had raised 300 million dollars. The next step, if confirmed by the company's management, will be an IPO. A Dantesque projection, even though its activity has not yet been rolled out in Europe.
Doubts about the business model
But its success in the United States is largely sufficient to classify Robinhood among the startups in hypergrowth. Its number of users has risen from 6 million in 2018 to more than 13 million according to the latest information officialized by the trading application. Moreover, like neo-banks such as Revolut and N26, its current business model is doomed to win tens of millions of customers in order to find economic equilibrium.
This is why Robinhood does not currently communicate on this subject. The company only announces that it managed to reach $180 million in revenues in the second quarter, a very promising amount, but which - like Revolut's financial results in 2019 - does not indicate anything about the level of losses: the neo-bank declared more than $218 million in revenues, but due to its astronomical sums in investments, posted losses of $138 million.
Another challenge for Robinhood is to continue to face criticism about its spending incentives. Some criticize the interface with the colors and buttons pushing compulsive behaviors. It should be said that the fintech application had its worst nightmare, with the death of a 20-year-old user who committed suicide after registering a negative balance of over $730,000 in early summer.
In order to keep it accessible while preventing abuse, the company had put in place an entire program of educational resources. The latest fundraiser was an opportunity for Robinhood to revisit the subject. Its new page dedicated to this battle would have gained 250% of traffic since the death of the young user.