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The U.S. consumer investment and trade service Robinhood announced this morning that it will acquire Say Technologies in a $ 140 million cash deal.
Say Technologies is a venture capital-backed startup that raised $ 8 million in 2018, according to data from Crunchbase. PitchBook data indicates that the company was worth $ 28 million after the investment, implying that the company’s backers achieved an ROI of around 5 times.
Say was backed by Point72 Ventures, among other investors.
The deal is remarkable because it is Robinhood’s first major purchase since its IPO in late July, and because it illustrates where Robinhood could look to invest some of its new wealth in liquid stocks; When a business goes public, it can more easily buy out other businesses with reloaded cash balances and floating stock.
In a blog post, Robinhood wrote that “Say was built on the belief that everyone should have the same access to the financial markets as Wall Street insiders.” What does that mean? Concretely, Say has built a communication platform that allows even smaller shareholders to ask questions of the companies in which they invest. Of course, some companies include questions of detail in their calls for results, but what Say has in mind is broader.
You can see how Say and Robinhood could fit together. Robinhood has a large pool of retail investor users who enjoy trading and investing. Say has the technology to connect retail investors with the businesses they own. With Robinhood’s database of which retail investor owns what and Say’s communication technology, the trading platform may be able to provide a better shareholder experience than competing platforms can offer. .
By offering its user base a service like the one Say has built, Robinhood can deliver a unique twist to retail investing. It sounds a bit like Spotify’s massive spending to get exclusive rights to certain podcasts; such efforts differentiate Spotify from its competitors despite an unmarked basic offering. Trading is now free in many places, so it makes sense for Robinhood to layer specialist services on top of its investing service, which perhaps can help retain users and add new net users.
Robinhood shares are down around 1.2% today, despite generally higher markets. We could tell investors were selling lightly as a result of the news, but that would be a somewhat daring read on today’s trade.
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