Robinhood, the free stock trading app, has raised $363 million in a brand new funding spherical valuing the corporate at $5.6 billion.
The Collection D spherical, introduced Thursday, makes Robinhood the second Most worthy personal fintech startup within the U.S. after Stripe, the net funds firm.
Bucking the mannequin of conventional brokerages—which depend on commerce commissions to generate profits—the three-year-old Robinhood has proven a capability to quickly overtake incumbents in one of many oldest Wall Avenue industries. Previously yr, the variety of Robinhood brokerage accounts has doubled to greater than four million, surpassing E*Trade, which had three.7 million based on its most lately month-to-month disclosure.
On the identical time, Robinhood’s valuation—which stood at $1.3 billion after its last fundraising round a yr in the past—has greater than quadrupled. DST International led Robinhood’s newest spherical, whereas new buyers together with Sequoia Capital, Kleiner Perkins, Iconiq Capital and Capital G (the enterprise capital arm of Google guardian Alphabet (googl)) additionally participated.
Driving that progress has been a flurry of recent product launches simply since final November, together with an internet model of the Robinhood app, commission-free choices buying and selling, and, most notably, free Bitcoin and cryptocurrency trading. Robinhood achieved that with fewer than 200 complete workers, although it’s planning to rent extra technical expertise and skilled executives with its new funding.
“I believe the true ‘X issue’ that made buyers much more enthusiastic about being part of Robinhood was seeing our skill to, with a really, very restricted workforce, to ship three model new merchandise in these final six months, whereas sustaining and rising one of many largest brokerages within the U.S.,” Baiju Bhatt, Robinhood’s co-founder and co-CEO, tells Fortune.
Robinhood Crypto, which launched in February and is at the moment out there in 10 U.S. states, is increasing to new states as quick as it may possibly safe the mandatory licenses for every, and Bhatt expects the providing to roll out country-wide by the top of 2018. Whereas the most well-liked place to commerce Bitcoin within the U.S. is at the moment Coinbase, which boasts greater than 20 million buyer accounts, Bhatt is assured that Robinhood will quickly change into a detailed rival—or take the lead altogether.
“We anticipate by the top of the yr to be both the biggest or one of many largest crypto platforms on the market,” says Bhatt. “However we additionally actually really feel we’ll have the very best expertise for investing in crypto as nicely—from having a big number of cash out there to a extra favorable value construction—primarily no commissions—to only high quality of product.”
Robinhood, which at the moment solely presents buying and selling of Bitcoin and Ethereum, additionally permits its customers to trace market information for a complete of 16 totally different cryptocurrencies, together with Ripple and Zcash. The corporate plans to make different cryptocurrencies out there to commerce ultimately, although Bhatt didn’t specify which of them. Coinbase, in the meantime, at the moment lists 4 cryptocurrencies for buying and selling (Bitcoin, Bitcoin Money, Ethereum and Litecoin).
Bhatt believes Robinhood can “unquestionably” obtain its aim to change into the chief in cryptocurrency buying and selling regardless of experiences over the previous week that main Wall Avenue establishments, together with Goldman Sachs(gs) and the guardian firm of the New York Inventory Trade plan to enter the Bitcoin trading market.
“Robinhood’s product cadence has been very spectacular,” says Andrew Reed, a associate at Sequoia Capital which invested in Robinhood for the primary time this spherical. “We invested as a result of we expect that Robinhood has the potential to carry its low-cost and user-first method to revolutionize giant parts of monetary providers.”
And whereas regulators together with the workplace of the New York legal professional normal have lately probed the legality of cryptocurrency exchanges, Bhatt says Robinhood is prone to have a head-start on any new necessities, as a result of the truth that it went by way of an identical course of for its authentic stock-trading product. Robinhood, for instance, is already a registered broker-dealer with the Securities and Trade Fee, which Coinbase isn’t (though it’s reportedly seeking to become one).
“We’re very happy to do it,” Bhatt says of assembly new potential cryptocurrency laws. “Completely fantastic.”
Robinhood, nonetheless, due to its no-commission mannequin, differs from its opponents in that it doesn’t make any cash on cryptocurrency buying and selling. The corporate, which doesn’t disclose income figures, as a substitute makes cash by way of its subscription service Robinhood Gold (with premium options similar to margin buying and selling and prolonged market hours), and by amassing curiosity on deposits. These income streams “allow us to supply issues like crypto without spending a dime,” Bhatt provides.
Different main cryptocurrency buying and selling platforms similar to Circle and Coinbase, then again, are each reported to make about $1 billion in annual revenue.
But even in mild of the revenue sacrificed by not charging commissions, Bhatt says Robinhood is sticking with its present technique; $150 billion in transactions have taken place on Robinhood up to now—amounting to greater than $1 billion saved on charges buyers would have needed to pay elsewhere, he notes.
“We plan on persevering with to supply these providers without spending a dime. There’s no actual state of affairs the place we’d change that in any respect,” Bhatt says. “I believe we’re fairly relentlessly targeted on our mission of creating the markets and the monetary providers system extra accessible to the broader inhabitants, and that’s a fairly good North star for us.”
This text has been up to date to make clear which cryptocurrencies are at the moment out there to commerce on Robinhood.