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Valued at $ 5.6 billion, the free trading app and Robinhood Cryptocurrency Exchange are starting to get ready for advertising. Just a year and a half ago, he was still largely under the radar. But in April 2017, it raised $ 110 million for Series C at a valuation of $ 1.3 billion and, a year later, it received $ 363 million for Series D, both led by the Russian company DST Global. Combined with the growth of its premium subscription for margin trading called Robinhood Now, startup now has the firepower and revenue needed to make a viable debut on Wall Street.
Today, at the Robinhood CEO, Baiju Bhatt Speaking to TechCrunch Disrupt SF, he revealed that his company is on the way to an IPO and has started his search for a CFO. The SEC, FINRA and its security team also conduct constant audits to make sure everything is hidden and locked.
The hiring of CFOs could help Silicon Valley's five-year startup to stand as the least expensive youth alternative to E * Trade and traditional stock brokers. They must also convince potential investors that, even if cryptocurrency prices are falling, allowing people to trade them for less than their competitors, as Coinbase is a powerful funnel for acquiring users.
Robinhood now has 5 million customers who track, buy and sell stocks, options, ETFs, US international deposit receipts and cryptos like Bitcoin and Ethereum. This represents twice as many customers as its current competitor, E * Trade, while it has 4,000 employees, against 250 for Robinhood.
The startup has raised a total of $ 539 million from prestigious investors such as Andreessen Horowitz, Kleiner Perkins, Sequoia and Google Capital G, allowing it to quickly deploy products before its competitors can react. This rapid increase in value may go to the head of some founders or crush them under pressure, but Bhatt cited "friendship" with his co-CEO Vlad Tenev as what keeps him healthy-minded .
The startup has three main monetization streams. First, it raises interest on the money that users keep in their Robinhood account. Second, it sells order flows to stock exchanges that want more cash for their traders. And he sells Robinhood Gold subscriptions that range from $ 10 per month for an additional purchasing power of $ 2,000 to $ 200 per month for a $ 50,000 margin trading, with a 5% APR rate. Gold has seen its number of subscribers increase by 17% a month earlier this year, which shows the potential to give trades for free and charge for additional services.
But Robinhood is also facing renewed competition both as start-ups and incumbents. The European banking app Revolut is setting up a commission-free stock trading, and the start-up Y Combinator Titan has just launched its app that allows you to buy a managed portfolio of prominent securities . The financial giant, JP Morgan, now offers customers 100 free transactions in the hope of not being threatened by Robinhood.
Crypto side, Coinbase continues to gain popularity despite its fees of 1.4 to 4% on trades. Its product offering is expanding rapidly and the two Fintech startups are set to collide. Robinhood may also suffer from the cryptographic crisis, which is likely to dissuade the general public from dumping cash into chips after seeing people lose their fortunes as Bitcoin and Ethereum prices have fallen this year.
There is also the continuing risk of a security breach that could jeopardize the Robinhood brand. At the same time, the startup uses both human and third-party software systems to moderate its discussion forums to ensure that pumping and dump systems are not generalized. Bhatt says he is proud to make cryptocurrency more accessible, although he did not say he felt responsible for falling prices, which could mean that many users of Robinhood Crypto have lost money.
Basically, Robinhood uses software to make the current but expensive behavior of stock trading much cheaper and more accessible to a wider audience. Traditional banks and brokers have significant costs for offices and branches, business executives and TV commercials. Robinhood has succeeded in replacing much of that with a lean engineering team and a growing viral application. Once he has found his CFO, this could give him an efficiency and a growth rate comparable to those of Wall Street.
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