- Robinhood secured another $200 million in funding and has reported healthy H1 2020 trading and revenue numbers.
- And while Robinhood is coming out on top during the pandemic, fintechs in other segments are struggling to convince investors of their value.
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The US-based commission-free trading platform has secured a $200 million Series G funding round from new investor D1 Partners, per CNBC. This round follows the startup closing its $600 million Series F round only last month. The latest capital injection values Robinhood at $11.2 billion, up from $8.6 billion after its previous round. The newly raised funds will be used to invest in its core product and enhance the customer experience.
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Robinhood is having a good 2020, despite hiccups along the way, and the latest round shows investors’ continued confidence in the platform’s success.
- The platform has seen increased trading activity amid pandemic-related market volatility, boosting its revenue and sustainability. Robinhood’s daily average revenue trades more than doubled in Q2 compared with the prior quarter and reached 4.3 million in June — which is higher than all other publicly traded incumbent brokers, per CNBC. Moreover, it doubled the money it makes from customer trades from Q1 2020, with options trading making the most revenue for Robinhood. And as of May, it had added 3 million new customers to its platform since the beginning of the year.
- The latest round shows Robinhood’s continued commitment to improving customer service tools in response to issues on the platform. Growing pains — including multiple outages and concerns about its customer service operations — have plagued the startup throughout 2020. However, it has since doubled down on customer support and educational tools: It plans to hire hundreds of representatives and customer support staff by the end of 2020 for its new offices in Texas and Arizona, and pledged to expand educational content related to options trading. Of note, use of Robinhood’s educational resources on the basics of investing was up over 250% since January.
Robinhood and its wealthtech peers are coming out on top during the pandemic, while fintechs in other segments are struggling to convince investors of their value. Global wealthtech funding more than doubled from $450 million in Q1 to $1.2 billion last quarter, per a report from CB Insights — even higher funding levels than in the quarters prior to the pandemic.
For context, wealthtech has seen the steepest quarter-over-quarter increase across all fintech segments, according to the same report, likely due to the increased importance of tools that can help consumers better invest their money for the future amid the economic downturn caused by the pandemic.
And investors apparently expect this will persist: Robinhood’s new investors and further increased valuation indicate confidence in its continued success, at a time when fintechs in other segments have to accept lower valuations, including UK neobank Monzo raising money at a 40% decreased valuation, and OnDeck being acquired for just $90 million after being valued at $1.5 billion at the time of its IPO.
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