The US-based commission-free trading startup has added $320 million to its Series F funding round, bringing the total to $600 million at an $8.6 billion valuation, per Finextra.

Global Yearly Fintech Funding Forecast



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It plans to use the funding to upgrade its platform, launch new products, and hire more staff. Robinhood offers commission-free trading with as little as $1, which is particularly attractive to first-time investors: Its customers average around age 32 and are usually new to trading.

This latest round suggests that investors remain confident in Robinhood’s future despite recent setbacks.

  • The trading platform has enjoyed user and revenue growth amid the coronavirus pandemic. Robinhood has added 3 million new users this year and reported around $60 million in revenue this March, three times as much as the prior month. The pandemic has accelerated the shift to digital services, and the ensuing market volatility has encouraged more consumers to try their luck.
  • However, its platform has also experienced recurrent outages, and amateur customers have lost thousands of dollars. In both March and June, Robinhood users were unable to access their accounts due to increased trading volumes overwhelming the platform. There have also been troubling tales of users losing significant amounts, blaming the app’s gamelike interface and its complex financial instruments. And outages exacerbate losses, since a matter of minutes can make a difference between gaining or losing on stocks. Additionally, the app has no phone number for customers to call to get quick help.

These issues highlight the need for Robinhood to add educational tools to better protect its users and regain their trust. Customer relations have soured, dragging Robinhood into lawsuits and forcing it to install protective glass in front of its office due to disgruntled users regularly showing up.

In response, the trading platform is adding educational resources to its platform, though the focus is currently on options trading. Robinhood should ensure users can access information on all aspects of trading, similar to its blog posts on financial jargon. These types of posts should be integrated into the trading part of the platform so that they pop up on users’ phones while trading rather than remain in a separate section. These efforts should strengthen user trust in the platform, boosting customer retention.

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